Many people wonder what happens to their Social Security benefits if they keep working after reaching full retirement age. In 2025, this question is more important than ever as people live longer and want to stay financially secure in their later years.
Let’s break down what you need to know about Social Security benefits when you work beyond your full retirement age.
What Is Full Retirement Age?
Full retirement age (FRA) is the age at which you can receive your full Social Security benefits without any reduction. For most people, this age ranges between 66 and 67 years, depending on their birth year.
If you claim benefits before your FRA, your payments will be reduced. If you wait past your FRA, you can earn delayed retirement credits, which increase your monthly benefit.
Working After Full Retirement Age: Does It Affect Your Benefits?
Good news! Once you reach your full retirement age, your Social Security benefits will not be reduced, no matter how much you earn. This means you can keep working and earning money without worrying that your benefits will be cut.
Before you reach full retirement age, however, there are limits to how much you can earn without reducing your benefits. But after FRA, those limits no longer apply.
Earnings Limit Before Full Retirement Age
If you start collecting benefits before your full retirement age and continue working, there is an earnings limit set by the Social Security Administration (SSA). In 2025, this limit is expected to be around $21,240.
If your earnings exceed this limit, SSA will withhold $1 in benefits for every $2 you earn above the limit. This means your monthly benefits will be reduced temporarily, but this reduction is not permanent.
What Happens at Full Retirement Age?
The month you reach full retirement age, SSA will recalculate your benefit to give credit for any months your benefits were reduced due to your earnings. This means the benefits you lost before FRA because of working will be paid back to you later in the form of higher monthly benefits.
So, even if your benefits were reduced earlier, you will eventually get back that money when you reach FRA.
Delayed Retirement Credits: Earn More if You Wait
If you decide not to take benefits right at your full retirement age and continue working, you can earn delayed retirement credits. These credits increase your benefits by a certain percentage for every year you delay claiming benefits until age 70.
For example, if your full retirement age is 66 and you wait until 70 to claim benefits, you could receive up to 32% more each month.
This option is helpful if you are healthy and plan to work longer. It allows your Social Security benefit to grow, providing a larger monthly payment in your later years.
Why Do People Work Past Full Retirement Age?
Many Americans choose to keep working beyond their full retirement age for several reasons:
- Financial security: Working longer means more income, which can help cover living expenses and delay dipping into retirement savings.
- Health benefits: Some people enjoy their jobs and want to stay active and engaged.
- Higher benefits: Delaying Social Security benefits increases the monthly amount you receive.
- Rising cost of living: With inflation increasing, extra income helps people keep up with expenses.
How Does Working Past FRA Affect Taxes on Social Security?
Your Social Security benefits may be taxable depending on your total income. If you have other earnings like wages, self-employment income, or investment income, a part of your Social Security benefits may be subject to federal income tax.
The tax rules did not change in 2025. If your combined income is above certain thresholds, up to 85% of your benefits could be taxable. It’s important to plan your income and taxes carefully when working past full retirement age.
Planning Tips for Working Past Full Retirement Age
Here are some simple tips if you plan to work beyond your full retirement age and want to maximize your Social Security benefits:
- Know your full retirement age: Check your birth year and understand when your FRA is, to plan accordingly.
- Consider your earnings: If you claim benefits early and work, be mindful of the earnings limit to avoid temporary benefit reductions.
- Delay benefits if possible: If you can afford to wait until after your FRA, you can increase your monthly payments with delayed retirement credits.
- Understand tax implications: Consult with a tax advisor about how working income may affect your Social Security tax situation.
- Keep track of your earnings: The Social Security Administration keeps a record of your earnings, which affects your benefit amount. Make sure your records are accurate.
What About Medicare?
Remember, Medicare eligibility starts at age 65, regardless of when you claim Social Security benefits.
If you keep working past 65 and have health insurance through your employer, you may choose to delay Medicare Part B enrollment without penalty.
Social Security and Inflation: What to Expect in 2025?
Social Security benefits typically get a cost-of-living adjustment (COLA) each year to keep up with inflation. For 2025, the SSA announced a modest COLA increase to help beneficiaries cope with rising prices.
This increase helps protect the buying power of your benefits, especially important if you rely mainly on Social Security income.
Where to Find More Information?
For official details, you can visit the Social Security Administration website at ssa.gov or call their helpline. They provide helpful tools like benefit calculators and earnings estimators to help you plan your retirement.
Summary
Working past your full retirement age in 2025 means you can earn money without losing Social Security benefits. After FRA, there is no earnings limit to worry about, and you can increase your monthly benefit by delaying claims until age 70.
Keep in mind the tax rules and consider your personal health and financial situation when deciding when to retire.
If you are planning your retirement or still working and wondering how your Social Security benefits will be affected, now is a good time to review your options and plan carefully for a secure future.