Most retirees lean on Social Security to some degree. According to a 2024 Gallup poll, a whopping 88% of retired U.S. adults say their benefits are either a major or minor source of income.
But the program can be confusing sometimes, and some lesser-known factors could reduce your benefits after you begin claiming. In some cases, your checks could be slashed by hundreds of dollars per month. Here's what you need to know.
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Your Social Security could be withheld if you meet these requirements
Around 44% of U.S. adults are unaware that continuing to work after taking Social Security could reduce their benefit amount, according to a 2024 survey from the Nationwide Retirement Institute.
To have your benefits withheld, you must be under your full retirement age (FRA), which is between 66 and 67 for everyone, and you must be earning income from a job. Depending on your age, if your earnings surpass a certain limit, your benefits will be withheld. The more you're earning, the greater these reductions will be.
In 2025, depending on whether you will or will not reach your FRA this year, the two income limits are $62,160 per year and $23,400 per year, respectively. For every $3 or $2, respectively, you're earning above these limits, your benefits will be reduced by $1.
| Will You Reach FRA in 2025? | Income Limit | Benefit Reduction |
|---|---|---|
| No | $23,400 per year | $1 reduction for every $2 over the limit |
| Yes | $62,160 per year | $1 reduction for every $3 over the limit |
Source: Social Security Administration. Table by author.
For example, say you're 65 years old, earn $30,000 per year from your job, and your FRA is 67 years old. In this case, you won't reach your FRA in 2025, meaning you'll be subject to the $23,400 annual limit.
Your income is $6,600 over that limit, so your benefits will be reduced by $3,300 per year. That amounts to a $275 monthly reduction due to your earnings.
The silver lining to these benefit reductions
There's good and not-so-good news about benefit reductions based on your earnings. The good news is they're only temporary, and your benefit will be recalculated once you reach your FRA. The amount that was withheld will be incrementally paid out each month in the form of larger payments. The not-so-good news, though, is that whether you'll actually recoup all the money that was withheld will depend on your lifespan.
In an example provided by the Social Security Administration, someone with a normal benefit amount of $1,000 per month may have their payment reduced to $655 per month for four years due to their earnings. Then, at their FRA, they'll start receiving $1,070 per month to account for the reductions.
However, to recoup everything that was withheld, they'll need to live until at least age 85. Keep in mind that this is only an example, and your breakeven point may vary. But if you have reason to believe you may not live well into your 80s, you could come up short depending on how much your benefits are reduced.
Working while taking Social Security can be a smart way to increase your income. Even if your payments are withheld, it could result in larger checks down the road. Just be sure you're aware of just how much these reductions will impact your bottom line to avoid any surprises in retirement.
