how much can i earn while on social security in 2025 at age 62

Vender Womder

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23-11-2024

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How Much Can I Earn While on Social Security in 2025 at Age 62?

Your Earning Potential on Social Security at 62 in 2025

Collecting Social Security at 62 while continuing to work presents a common question for many Americans approaching retirement. In 2025, the rules regarding earnings and Social Security benefits at age 62 remain largely the same as in previous years, although specific dollar amounts are subject to annual adjustments for inflation. This article outlines the general rules and what you need to know.

Understanding the Earnings Test

The Social Security Administration (SSA) implements an "earnings test" for those collecting Social Security benefits before their full retirement age (FRA). This means that for a portion of the year, some of your benefits will be withheld if your earnings exceed a specific limit. Crucially, the earnings test only applies to those under their full retirement age (FRA). This age varies depending on your birth year. For most people born in 1960 or later, the FRA is 67. Once you reach your FRA, there is no limit to how much you can earn while receiving Social Security benefits.

2025 Earnings Limits (Projected)

The exact earnings limits for 2025 will be released by the SSA closer to the year's beginning. However, we can project a reasonable estimate based on past trends and projected inflation. The limit for 2023 is $21,240. Assuming a moderate inflation rate, we can project the 2025 limit to be somewhere between $23,000 and $25,000. This is just an estimate, and you should check the official SSA website in late 2024 for the confirmed amount.

How Benefit Withholding Works

If your earnings exceed the annual limit, the SSA will withhold a portion of your benefits. For every $2 you earn above the limit before the year you reach your FRA, the SSA withholds $1 of your benefits. This withholding is temporary. Once you reach your FRA, the SSA recalculates your benefits, adding back in the withheld amount, and you'll receive any past benefits that were withheld, plus any increases due to COLA (cost of living adjustment).

Example:

Let's assume the 2025 annual limit is $24,000 and you earn $30,000 in 2025. The difference is $6,000. The SSA would withhold $3,000 ($6,000 / 2) from your benefits for the year.

Beyond the Annual Limit

The benefit withholding is not spread evenly throughout the year. It's important to note that the $24,000 limit is an annual limit. Even if you earn less than the limit in the first part of the year, exceeding it later will lead to benefit reduction for those months.

Important Considerations:

• Consult the SSA: Always check the official Social Security Administration website for the most up-to-date and accurate information regarding earnings limits and benefit calculations for 2025. The rules are complex, and consulting directly with the SSA is crucial.
• Tax Implications: Remember that your Social Security benefits may be subject to federal income tax depending on your total income.
• Future Benefits: While the earnings test temporarily affects your benefits, it does not permanently reduce your overall Social Security retirement benefits.

Planning for Your Retirement:

Careful planning is key. Consider your projected earnings, the potential impact on your benefits, and seek professional advice from a financial advisor to create a strategy that aligns with your financial goals. Understanding the earnings test and its impact on your benefits can ensure you make informed decisions about working and receiving Social Security benefits simultaneously.

Disclaimer: This information is intended for educational purposes only and should not be considered professional financial advice. It's crucial to consult with a qualified financial advisor and the Social Security Administration for personalized guidance based on your specific circumstances.