A person can collect Social Security benefits while working, but there are some rules and considerations to be aware of:
Earnings Test: n 2025, if you’re younger than your full retirement age (FRA) and earn more than $23,400 annually, your Social Security benefits will be reduced by $1 for every $2 earned above this limit. In the year you reach FRA, the earnings limit increases to $62,160, with a reduction of $1 for every $3 earned over this amount until the month you attain FRA. ssa.gov
These limits have increased from 2024, where the thresholds were $22,320 and $59,520, respectively. kiplinger.com
Once you reach your full retirement age, there is no limit on earnings; you can work and earn any amount without a reduction in your Social Security benefits. ssa.gov
Taxation of Benefits: If you work while receiving Social Security benefits, part of your benefits might be subject to federal income taxes depending on your combined income (your adjusted gross income + nontaxable interest + half of your Social Security benefits).
Impact on Investment Income, Pensions, Annuities, or Capital Gains: Generally, earnings from work do not directly affect income from investments, pensions, annuities, or capital gains. However, higher total income could lead to more of your Social Security benefits being taxed. This doesn’t reduce the Social Security benefits themselves but could affect your overall tax liability.
Effect on Spouse and Children’s Benefits: If you receive reduced benefits due to earnings over the limit, it could also reduce the benefits that your family receives based on your record. The total family benefit is capped by a family maximum, which could be affected if your benefits are reduced.
It’s important to plan carefully and consider the implications of continuing to work while receiving Social Security benefits, especially in terms of how it might affect your overall financial situation and tax obligations.
-Nguyễn Bách Khoa-