The Surprising Risk to Your Social Security Benefits in 2025 – What You Need to Know

Many retirees find themselves relying on Social Security benefits to cover their expenses. However, with the average retired worker receiving around $23,000 a year, many retirees consider supplementing their income with a part-time job.

This extra work not only brings in extra cash but can also provide mental and social benefits. If you’re considering working in retirement, it’s essential to know how it might impact your Social Security checks.

Let’s break down the rules, so you can make the most of both your income sources.

Benefits

Working during retirement offers much more than just extra income. For starters, it can provide a sense of purpose and structure to your daily routine, giving you a reason to get out of the house. Additionally, social interactions at work can be valuable for maintaining mental well-being, especially for those who miss the camaraderie of their former workplace. In many cases, even a few hours of work each week can improve overall quality of life.

The good news? Social Security allows you to work while collecting benefits—but there are important limits to consider, particularly if you haven’t yet reached full retirement age.

Rules

Once you reach full retirement age (FRA), which varies depending on your birth year, there’s no limit to how much you can earn from a job without affecting your Social Security benefits. Earnings from your job could even boost your monthly benefit if they rank among your 35 highest-paid working years. For those who reach FRA in 2025, this freedom means you can work as much as you want, with the potential for extra income and a positive impact on your Social Security check.

However, for those who begin collecting Social Security before reaching FRA, there are income limits. Social Security’s earnings test applies to your situation, and exceeding the limit means some of your benefits may be withheld temporarily.

Here’s a breakdown of the 2025 earnings-test limits:

Importantly, withheld benefits aren’t permanently lost. Once you reach FRA, Social Security recalculates your benefit, effectively paying back any amounts previously withheld.

Earnings-Test Limits

Let’s take a closer look at what these earnings-test limits mean. If you’re below FRA and earn over the limit ($23,400), Social Security will withhold $1 for every $2 above this threshold. However, if you turn full retirement age during 2025, the limit increases significantly to $62,160, and the withholding rate becomes $1 for every $3 earned above that amount.

This difference allows retirees nearing FRA to work more extensively without impacting their Social Security benefits as severely. However, it’s wise to stay aware of your earnings to avoid unexpected benefit reductions.

Considerations

Working in retirement can be a great choice if you’re looking to stay active, socialize, and supplement your income. However, it’s essential to balance your hours carefully, particularly if your goal is to improve your financial situation rather than reduce it.

When working hours or wages push your earnings above the threshold, some of your Social Security income will be withheld. Adjusting your work schedule can help you stay under the limit if needed to maximize both income streams.

A Worthy Choice

Overall, working in retirement has both financial and personal rewards. If you stay aware of Social Security’s earnings-test limits, you can make an informed decision about how much work is right for you. For many retirees, part-time work strikes the perfect balance between income, purpose, and social connection, enhancing retirement without straining Social Security benefits too heavily.

So, if you’re thinking about rejoining the workforce, don’t let the earnings limits hold you back. With careful planning, a part-time job can be a valuable addition to your retirement lifestyle.

FAQs