Social Security recipients and soon-to-be retirees often focus on cost-of-living adjustments (COLAs) to determine how their benefits will change each year. In 2025, the COLA was just 2.5%, the smallest increase in years, leaving many seniors frustrated.
However, another Social Security update flew under the radar—an increase in the earnings test limits. This change allows seniors to earn more income while collecting Social Security without as much of a penalty. Here’s what you need to know.
Earnings
A 2024 survey by Resume Builder found that 13% of retirees planned to work in 2025. While some were motivated by financial needs, others simply wanted to stay busy.
If you’ve reached full retirement age (FRA), you can earn as much as you want without your Social Security benefits being affected. But if you claim benefits before FRA and continue to work, you’re subject to an earnings test limit—and exceeding that limit means some of your benefits will be temporarily withheld.
The good news? The earnings test limits increased in 2025, meaning you can earn more before facing reductions.
Earnings Test Limits
| Retirement Status | 2025 Earnings Limit | 2024 Earnings Limit | Reduction Rate |
|---|---|---|---|
| Below Full Retirement Age (FRA) | $23,400 | $22,320 | $1 withheld per $2 earned over the limit |
| Reaching FRA in 2025 | $62,160 | $59,520 | $1 withheld per $3 earned over the limit |
| Full Retirement Age or Older | No Limit | No Limit | No reduction |
If you are under FRA and earn more than $23,400 in 2025, the Social Security Administration (SSA) will withhold $1 in benefits for every $2 you earn above that limit.
If you will reach FRA in 2025, your earnings limit is significantly higher—$62,160. Beyond that amount, $1 is withheld for every $3 earned over the limit.
Withheld Benefits
If your earnings exceed the limit, you won’t lose that money permanently. Once you reach FRA, Social Security will recalculate your benefits, increasing your monthly payments to compensate for the months when your benefits were withheld.
However, this adjustment doesn’t come as a lump sum. Instead, you receive higher monthly payments over time.
Why This Matters
This increase in earnings limits is especially helpful for:
- Retirees who want to work part-time without major reductions in Social Security benefits.
- People nearing FRA who need extra income but don’t want to risk a steep benefit cut.
- Those considering early retirement who might still earn some income while collecting Social Security.
If you’re already receiving Social Security or plan to retire soon, knowing these limits can help you make informed financial decisions about working while collecting benefits.
FAQs
What is the 2025 Social Security earnings limit?
For those below full retirement age, the limit is $23,400. For those reaching full retirement age in 2025, it’s $62,160.
What happens if I exceed the earnings limit?
Social Security will withhold $1 for every $2 (or $3) earned over the limit, depending on your age.
Will I lose withheld Social Security benefits permanently?
No, once you reach full retirement age, your monthly benefits will increase to compensate for withheld amounts.
Do earnings affect Social Security after full retirement age?
No, after full retirement age, you can earn any amount without impacting your benefits.
Can working while on Social Security increase my benefits?
Yes, if your earnings replace lower-income years in your work history, your benefit calculation may increase.
