Receiving an average of $23,000 annually from Social Security, many retired individuals face challenges maintaining a comfortable standard of living. Because of this, some retirees consider part-time work to supplement their Social Security income. Working in retirement offers a range of benefits beyond just the financial: it provides a routine, a chance to stay socially engaged, and can positively impact mental health by reintroducing a social support network.
Retirees should know that they can work while receiving Social Security. However, working before reaching full retirement age (FRA) may trigger an “earnings test” that could impact their monthly Social Security benefits. Here’s how the rules apply for 2025.
Understanding Social Security’s Earnings Test in 2025
The Social Security Administration (SSA) imposes earnings limits on beneficiaries under full retirement age. If these limits are exceeded, the SSA withholds a portion of benefits. Below is a breakdown of these limits for 2025.
1. Earnings Limit for Beneficiaries Below Full Retirement Age
If you will not reach full retirement age during 2025, the earnings limit is set at $23,400. For every $2 earned over this threshold, the SSA will withhold $1 in Social Security benefits.
2. Earnings Limit for Beneficiaries Reaching Full Retirement Age in 2025
For beneficiaries who will reach full retirement age at any point during 2025, the earnings limit is $62,160. In this case, the SSA will withhold $1 for every $3 earned above the limit.
Withheld Benefits vs. Forfeited Benefits
It’s essential to understand that “withheld” benefits are not lost permanently. When you reach full retirement age, the SSA recalculates your benefit amount and reimburses you for previously withheld payments. In other words, your Social Security benefits will adjust to reflect these withheld amounts, restoring what was initially deducted.
Adjusting Work Hours to Maximize Benefits
For retirees planning to work, monitoring income levels can help avoid having too much of their Social Security withheld. Consider scaling back on work hours if you are close to exceeding the earnings limit and want to maximize the benefits you’ll receive each month.
Benefits of Working in Retirement Beyond Income
Working while receiving Social Security offers more than just financial perks. Many retirees enjoy the added routine and sense of purpose that part-time work provides. Additionally, the social connections that come with working can be a crucial support for mental and emotional well-being.
2025 Social Security Payment Schedule
Retirees can expect their new, adjusted Social Security benefits beginning in January 2025. Here is the payment schedule for January:
| Date | Recipient Category |
|---|---|
| January 3 | RSDI beneficiaries who claimed before May 1997 |
| January 8 | Beneficiaries born between the 1st and 10th of the month |
| January 15 | Beneficiaries born between the 11th and 20th of the month |
| January 22 | Beneficiaries born between the 21st and 31st of the month |
| January 31 | SSI recipients |
The SSA payment dates vary depending on birth date and benefit claim date. This ensures that beneficiaries receive their payments on a staggered schedule throughout the month.
Key Considerations for Working Retirees
- Monitor Earnings: Keep track of your earnings to avoid surpassing SSA thresholds if you’re below FRA.
- Evaluate the Value of Working: Working provides financial benefits and fulfills emotional and social needs that retirement might lack.
- Understand Future Adjustments: Withheld benefits will be recalculated once you reach FRA, ensuring you don’t lose benefits permanently.
- Plan Around the Schedule: Knowing when to expect payments can aid in budgeting, especially for those supplementing with part-time income.
Working during retirement can enhance financial stability and improve quality of life, provided retirees understand the earnings limits and potential benefit adjustments. With careful planning, it’s possible to maximize both Social Security income and the additional earnings from part-time work.
FAQs:
Can I work full-time and still receive Social Security benefits?
Yes, but if you’re under full retirement age and earn above the earnings limit, the SSA will withhold a portion of your benefits.
What happens to withheld Social Security benefits when I reach full retirement age?
When you reach FRA, the SSA recalculates your benefit amount and reimburses previously withheld payments.
How often does the SSA update the earnings-test limits?
The SSA adjusts earnings-test limits annually based on inflation and other economic factors.