Whether you are retired or planning to, don’t cross the earnings limit because it could cut your Social Security check. Most retirees continue to work even when they have attained full retirement age (FRA) as long as they have the energy. However, sometimes this works against you because earning too much could reduce what you take home from Social Security.
In 2025, updated limits set by the Social Security Administration (SSA) could impact thousands of retirees who continue to work. The 2025 earnings limit may seem like just a number, but crossing it could mean giving up hundreds or even thousands of dollars in benefits.
Social Security Updates Earnings Limits for 2025
Every year, the SSA updates the income thresholds that determine whether your benefits will be temporarily reduced if you work while receiving Social Security. For 2025, the earnings limits have increased slightly compared to 2024:
- If you’re under full retirement age (FRA) for all of 2025, the limit is $23,400.
- If you reach FRA during 2025, the limit is $62,160 (only counting earnings before your birthday).
- Once you hit your FRA, there is no limit to what you can earn, and your benefits will no longer be reduced.
So, what happens if you earn more than these limits? That’s when you cross the line, and your Social Security check could be cut.
How Much Does It Cut from Your Social Security Check?
If you’re under full retirement age for the entire year and make more than $23,400, the SSA will deduct $1 from your benefits for every $2 you earn over the limit. Let’s say you’re 63 and earn $28,400 at a part-time job. That’s $5,000 over the 2025 earnings limit. As a result, you’ll lose $2,500 from your Social Security check for the year. If your monthly benefit is $1,500, that could mean losing nearly two months of payments.
If you reach full retirement age in 2025, the rules are slightly more lenient. The SSA deducts $1 for every $3 you earn over the $62,160 limit, and only counts earnings before the month you reach FRA. For example, if you earn $70,160 by the time you turn 67 in September, you’ll lose $2,667, or about one full month of benefits if your monthly payment is $2,500.
Don’t Cross This Line Without a Plan
Don’t cross this line unless you’re prepared for a smaller Social Security check. For some, the loss of benefits could be temporary, but the hit to your budget might still sting.
Even though your payments are reduced now, there’s good news: the SSA recalculates your benefits once you reach FRA. You’ll eventually recoup the lost money through higher future payments. But if you’re relying on monthly Social Security checks to pay your bills, reductions can be financially painful.
Why Working May Still Be Worth It
Working while collecting Social Security benefits can still be a wise financial decision, even though there is a chance that payments will be decreased and here are the reasons:
- You may be eligible for a recalculated and higher Social Security payout if your current earnings rank among your top years.
- You can earn any amount when you reach full retirement age without having your monthly check reduced.
- Deferred retirement credits can increase your monthly payments by up to 8% annually if you decide to postpone receiving benefits until you reach full retirement age, or even until you are 70.
Therefore, working longer can result in larger long-term increases in your retirement income, even though your check may be momentarily less.
Special Rule for First-Year Retirees
There is one noteworthy exception. A particular rule applies if you begin receiving Social Security benefits in the middle of the year after retiring. As long as your monthly wages stay below a certain threshold, the SSA will pay full benefits for each month that you are deemed “retired,” regardless of your annual earnings. This increases flexibility for first-year retirees without depleting their checks right away.
Earnings That Don’t Count
The SSA only counts earnings from employment or net earnings for those who are self-employed. Therefore, earnings from pensions, investment income, veterans’ benefits, interest income, annuities, and interest income of government or military retirement plans.
The 2025 earnings limit can impact your retirement income more than you might expect. Whether you’re 62 or 66, make sure you know the numbers before you decide to work while collecting Social Security. If you don’t plan, you could cross the line and lose part of your Social Security check.
But if you’re strategic, staying under the limit or delaying your claim can help you maximize your long-term retirement income. As always, consult with a financial advisor or use the SSA’s earnings test calculator to make the best decision for your situation.