2023 Social Security Income Limit - Social Security Intelligence (2023)

2023 Social Security Income Limit - Social Security Intelligence (1)

Note: The Social Security income cap changes each year. The most current version of this article uses figures for 2023.

At one of my first conferences, I heard a great story from one of the participants. His experience is one of the best examples I've heard of how much the Social Security income limit can surprise you.

A few years earlier, she had been at her bridge club when the topic had turned to Social Security. As she and the other card players discussed the best way to take advantage of Social Security benefits, the consensus around the table seemed to be that registering at age 62 was best.

This lady did just that, relying on the advice of some of her closest friends: She applied for benefits as soon as she turned 62.

Then he told me that he had always wanted to buy a new Toyota Camry. He figured that once he started collecting Social Security income, it would be the perfect time to buy the car. He was still working, which meant his Social Security check would be extra income.

When he told me the story, he bought the car and took out a loan. He planned to repay the loan with part of the income he expected to earn from his Social Security benefits since he applied for them.

So imagine her surprise when an ugly letter from the Social Security Administration showed up in her mailbox. The letter said that he had received benefits to which he was not entitled!

The Social Security Administration not only asked him to return his benefits, but also told him that future benefits would be suspended based on his earnings.

I now had a new car and an auto loan with no Social Security benefits that I wanted to use to pay my monthly bill. What happened here?

Something that surprised me more than the poor Camry owner who spoke to me that day: the Social Security income cap.

What is the social security income limit?

The income limit is also known as the income limit or income test. The official term is "merit test."income limitmiincome limitare the terms you will hear the most.

For our purposes, you should know that these terms all mean the same thing, and there are four quick facts about the Social Security earnings cap to know before we begin to explain the test or cap:

  1. Please note that these are the Social Security income limits for retirement benefits,noDisability or SSI.
  2. The Social Security income limit is not the same as theSocial security income tax🇧🇷 Don't confuse the two!
  3. The earnings limit does not apply if you claim benefits at full retirement age or beyond. These limits only apply to people who receive Social Security benefits before reaching full retirement age.
  4. The win limit is an individual limit. If you are still working and your spouse is on Social Security,Your income does not count toward the income limit.

Why do we have an income limit?

Not too long ago, a viewer of my YouTube channel asked me to give him a good reason why we have a Social Security income cap. The comments below showed how many viewers felt the win cap was unfair and should be removed.


In my response, I explained that the whole social security program was made to create a safety net. The original intent of the Social Security program was not to supplement retirement income but to keep seniors (most of whom lost any potential long-term wealth during the Great Depression) out of poverty.

I added that the current income cap is relatively generous compared to the previous Social Security income cap.The original Economic Security Bill (that's the original name for the Social Security Act) sent to Congress by President Roosevelt contained aa lot ofrestrictive income limit.

That bill states: “No one will receive such an old-age pension unless . 🇧🇷 🇧🇷 He doesn't work for anyone else."

Wow! That means you couldn't get Social Security benefits if you were earning $1 at a job.

(In case you are curiousYou can read more about the history of the Social Security income limit here..)

Fortunately, the system we have today allows people to earn some income from work while receiving Social Security benefits.

However, it is very important to keep track of the dollar amount of this limit, as it changes each year.

For 2023, the Social Security income limit is $21,240.For every $2 over this limit, $1 in benefits will be withheld.

The exception to this dollar limit is the calendar year in which you reach full retirement age. For the period from January 1 to the month in which you reach full retirement age, the earnings limit increases to $56,520 (for 2023) with no reduction in benefits.For every $3 over this limit, $1 in benefits will be withheld.

This means that if your birthday is in July, you will have an increased income limit for 6 months before you reach full retirement age. This increased limit and reduced deductible allows many people to retire early in the calendar year in which they reach full retirement age, rather than waiting until their actual birthday.

Again, there is no reduction in benefits after you reach full retirement age, regardless of your income level.

2023 Social Security Income Limit - Social Security Intelligence (2)

(Video) This Is The Best Social Security Calculator I've Seen

A real-world example of the Social Security earnings cap in action

To put these numbers in context, let's look at an example of how this might work in a real world scenario:

Rosie is 64 years old. She began receiving Social Security benefits as soon as she turned 62. Based on her birth year, her full retirement age is 66.

Rosie is currently entitled to $20,000 in Social Security benefits per year. She also worked during the year and earned $31,240 in wages.

The question we want to understand is how much was Rosie's work benefit cut during Social Security?To answer this, we first need to figure out how much Rosie was over the Social Security income limit for her age.

In 2022, Rosie applied for Social Security; She received her first check in January 2023. She received $1,667 in benefits every month for the entire year. Without knowing the rules, she also worked and earned a salary of $31,240.

With a Social Security income cap of $21,240, he exceeded them by $10,000:

Total wages of $31,240: the Social Security income threshold of $21,240 = income of $10,000 over the threshold

Because this is a full calendar year in which Rosie receives benefits but has not yet reached full retirement age, the pension reduction is $1 for every $2 overpaid. Because she crossed the $10,000 threshold, her benefits will be reduced by $5,000.

The drawdown calculation would look like this:

Earning $10,000 over the threshold x 50% ($1 reduction for every $2 over the threshold) equals a $5,000 benefit reduction

With a $5,000 cut in benefits for exceeding the income limit, Rosie's annual Social Security benefit is reduced from $20,000 to an annual benefit of $15,000. She would reach full retirement age the following year, and after her birthday the limit would no longer apply.

How does the income cap affect benefits for spouses, survivors or children?

There are millions of people who receive benefits as "assistants" of pensioners or disabled people. These beneficiaries are also subject to the same income test.

(Video) Social Security Spousal Benefits Simplified

See the table below for more details on how the limits apply to each type of benefit.

2023 Social Security Income Limit - Social Security Intelligence (3)

Special monthly income limit for the first year (or your free year)

Many people who retire mid-year have already earned more than their limit allows. Therefore, there is a special regulation in which the profit limit is changed from a yearly limit to a monthly limit. (These monthly limits are 1/12 of the yearly limit.)

This rule allows you to receive a check for each month that the SSA considers you "retired," even if you have already exceeded your annual income limit.

This sounds simple enough, but the interpretation of "retired" as defined by the SSA can cause some confusion. This is what they mean by this term:

You are retired when your monthly income is 1/12 of the annual limit ($1,770 by 2023) or less and you have not performed any significant self-employment service.

Basically, you are considered a pensioner unless you earn more than the income limit. The full retirement age rule also applies when working with the monthly cap. This calendar year 2023, the limit is $4,710 (1/12 of $56,520).

It is very important to remember that in the year after this first year, the monthly limit will no longer be used and the earning limit will only be based on your annual earning limit.

How the income limit is applied

The most confusing part of the income-based benefit reduction is how it is reflected in your monthly benefit payments. Instead of withdrawing a little each month, the SSA keeps several months of benefits at a time.

If you predict in advance that you will have excess income and report it to the Social Security Administration, you may not receive benefits for a few months.prior toIn fact, you earn excess projected income.

For example, if your Social Security payment is $1,667 per month and you expect to receive $31,240 in wages from your job, the administration estimates that you will exceed your earnings limit by $10,000 and therefore $5,000 in benefits must be paid. Therefore, they would withhold your benefit payment from January through March. In April his checks would resume.

If you do not report excess income before it is earned, you must report that information after it is earned. You can do this when you file your tax return, but the preferred method is to be proactive and call your local Social Security office.


If you expect the Social Security Administration to learn of your excess income through your tax return, there may be a significant gap between the time you earn the excess income and the time your benefits are withheld. In most cases, it is best to report excess income quickly so that benefit reduction occurs closer to the time you actually earn that additional income.

Whether your benefits are withheld earlier or later, benefit withholding can make budgeting and planning difficult, especially if you don't understand the system. It may be necessary to establish a separate savings account to set aside some of this income for future pension withholding.

What income counts as income?

The Social Security income limit only applies to gross wages and net earnings from self-employment. All other income is excluded, including pensions, interest, annuities, IRA distributions, and capital gains.

The term "salary" refers to your gross salary. This is the money you earn before any deductions, including taxes, pension contributions, or any other deductions.

2023 Social Security Income Limit - Social Security Intelligence (4)

For a more detailed discussion of what counts as income toward the income limit, please read my article onSocial Security Income Limit: What Counts as Income?

What to do if your benefits are already being withheld?

If you are subject to the Social Security income limit, don't wait for SSA to start reducing the benefit you receive. Instead, I would recommend discontinuing benefits voluntarily.

If you wait for the Social Security Administration to determine that you made a lot of money working while receiving benefits, your risk ofoverpayment noticeis greater than.

In either case, you will not lose any payments that you will never get back. The amount of your pension will be recalculated when you reach full retirement age (or when you stop working) to reflect the months in which your pensions have been withheld.

The best way to avoid an earnings cap is to wait until full retirement age to claim benefits. If you can't wait, make sure you understand exactly how the job will affect your Social Security benefits.

If you still have questions, you can leave a comment below, but what could be more helpful is to join mine.FREE Facebook Members Group🇧🇷 It's very active and has some really smart people who will be happy to answer all your Social Security questions. I also stop from time to time to add to my thoughts.

You should also consider joining the nearly 400,000 subscribers to my.Channel from Youtube🇧🇷 For visual learners (like most of us), here I break down the complex rules and help you figure out how to use them to your advantage.

(Video) How To Calculate Social Security Survivor Benefits(Repost)

One last thing you can't miss: get your FREE copy of mySocial Security Fact Sheet.This handy guide takes all the important rules from the huge Social Security website and condenses them into just1Side.


What is the maximum Social Security benefit in 2023? ›

The monthly maximum Federal amounts for 2023 are $914 for an eligible individual, $1,371 for an eligible individual with an eligible spouse, and $458 for an essential person.

What happens if I exceed the Social Security earnings limit? ›

If you are younger than full retirement age and earn more than the yearly earnings limit, we may reduce your benefit amount. If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2022, that limit is $19,560.

What changes are coming to Social Security in 2023? ›

With that in mind, here are three big changes coming to Social Security in 2023.
Image source: Getty Images.
  • Large cost-of-living adjustment (COLA) for Social Security benefits. ...
  • Higher earnings limits for beneficiaries under full retirement age (FRA) ...
  • Bigger maximum benefit for retired workers.
3 days ago

What is the Social Security and Medicare tax rate for 2023? ›

NOTE: The 7.65% tax rate is the combined rate for Social Security and Medicare. The Social Security portion (OASDI) is 6.20% on earnings up to the applicable taxable maximum amount (see below).

Does Social Security Monitor your bank account? ›

To verify resources, SSA uses an electronic system that verifies bank account balances to determine if claimants are eligible for SSI. In addition, SSA's system searches for accounts geographically near the SSI applicant or beneficiary. If a claimant fails to report a account, they will find it.

At what age can you have unlimited earnings on Social Security? ›

How much can you earn and still get benefits? later, then your full retirement age for retirement insurance benefits is 67. If you work, and are full retirement age or older, you may keep all of your benefits, no matter how much you earn.

At what income is Social Security maxed? ›

The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2022, your maximum benefit would be $3,345. However, if you retire at age 62 in 2022, your maximum benefit would be $2,364.

Will there be a 2023 Social Security increase? ›

Your Social Security benefits will increase by 8.7% in 2023 because of a rise in cost of living,” the Social Security Administration states in the annual statements it is currently sending to beneficiaries.

What is the increase for 2024 Social Security? ›

Starting December 2024, compute the COLA using the Consumer Price Index for the Elderly (CPI-E). We estimate this new computation will increase the annual COLA by about 0.2 percentage point, on average.

Can I have a savings account while on Social Security? ›

The good news is that you can have a bank account and be eligible to receive Social Security Disability benefits as long as you meet the other eligibility requirements. The Social Security Administration does not limit the number or value of resources or assets you may own.

Does money in the bank affect Social Security retirement? ›

Social Security does not count pension payments, annuities, or the interest or dividends from your savings and investments as earnings. They do not lower your Social Security retirement benefits.

Which president took money from Social Security? ›

Unless we act now, the Disability Insurance Trust (DI) Fund will be exhausted in 1979 and the Old Age and Survivors Insurance (OASI) Trust Fund will run out in 1983.
President Jimmy Carter.
10 more rows

Can I work full time at 70 and collect Social Security? ›

Retirement is different for everyone

Because you are age 70 or older, you should apply for your Social Security benefits. You can receive benefits even if you still work. Waiting beyond age 70 will not increase your benefits.

Can I work full time at 65 and collect Social Security? ›

When you reach your full retirement age, you can work and earn as much as you want and still get your full Social Security benefit payment. If you're younger than full retirement age and if your earnings exceed certain dollar amounts, some of your benefit payments during the year will be withheld.

What is the Social Security 5 year rule? ›

You must have worked and paid Social Security taxes in five of the last 10 years. If you also get a pension from a job where you didn't pay Social Security taxes (e.g., a civil service or teacher's pension), your Social Security benefit might be reduced.

How much Social Security will I get if I make $120000 a year? ›

If you make $120,000, here's your calculated monthly benefit

Assuming that you earn an inflation-adjusted $120,000 for at least 35 years, and that the maximum taxable Social Security wage base is $120,000 or higher during these years, this would translate to a lifetime monthly average of $10,000.

How much Social Security will I get if I make $90000 a year? ›

Here's how much your Social Security benefits will be if you make anywhere from $30,000 to $100,000 per year. The average Social Security benefit is around $1,544. With inflation on the rise, retirees are expected to get as much as a 6% cost-of-living increase in their 2022 checks to shore up their budgets.

Is the Social Security income limit net or gross? ›

When reporting your wages, Social Security requires that you report your gross income — the amount you've earned before any deductions were taken from your paycheck. Social Security looks at gross income to determine whether you're meeting or exceeding substantial gainful activity (SGA).

What happens if you over contribute to Social Security? ›

Social Security will send you a notice explaining the overpayment with a request for you to repay the amount within 30 days of the notice. If you are receiving SSDI payments, Social Security will withhold the full amount of your benefit each month, unless you request a lesser withholding amount.

What if I reached the wage cap for Social Security with a previous employer? ›

What if I reached the wage cap for social security with a previous employer? If an employee has already met the annual wage base limit for Social Security with a previous employer in a given year, they can contact a tax advisor to recover any excess tax paid on their personal returns.

How much can I earn in 2022 and still collect Social Security? ›

In 2022, you can earn up to $19,560 a year without it impacting your benefits. From there, you'll have $1 in Social Security withheld for every $2 you earn.

Can I draw Social Security at 62 and still work full time? ›

You can get Social Security retirement benefits and work at the same time. However, if you are younger than full retirement age and make more than the yearly earnings limit, we will reduce your benefit. Starting with the month you reach full retirement age, we will not reduce your benefits no matter how much you earn.

Can I get my Social Security money in a lump sum? ›

If you wait until after your full retirement age to claim your Social Security retirement benefits, there is a little-known rule that could entitle you to a large chunk of cash all at once. This provision enables retirees who meet this requirement to receive up to six months of retroactive benefits in one lump sum.

Do you have to file a tax return if you are on Social Security? ›

Generally, if Social Security benefits were your only income, your benefits are not taxable and you probably do not need to file a federal income tax return.

At what age are you no longer penalized by Social Security for working? ›

You can earn any amount and not be affected by the Social Security earnings test once you reach full retirement age, or FRA. That's 66 and 2 months if you were born in 1955, 66 and 4 months for people born in 1956, and gradually increasing to 67 for people born in 1960 and later.

What happens to Social Security if you work past 70? ›

Retirement is different for everyone

Because you are age 70 or older, you should apply for your Social Security benefits. You can receive benefits even if you still work. Waiting beyond age 70 will not increase your benefits.

Can I work full time at 66 and collect Social Security? ›

When you reach your full retirement age, you can work and earn as much as you want and still get your full Social Security benefit payment. If you're younger than full retirement age and if your earnings exceed certain dollar amounts, some of your benefit payments during the year will be withheld.

Can you collect a pension and Social Security at the same time? ›

Yes. There is nothing that precludes you from getting both a pension and Social Security benefits. But there are some types of pensions that can reduce Social Security payments.

How do I get the $16728 Social Security bonus? ›

How to get the $16,728 bonus in retirement?
  1. Work as long as you can: the later you retire the higher your benefit will be. Remember that 70 is the maximum age. ...
  2. Years worked: If you work less than 35 years you will have a reduction in your SSA check. ...
  3. High salary: with a high salary you will have a high retirement.
14 Sept 2022

Why retiring at 62 is a good idea? ›

Probably the biggest indicator that it's really ok to retire early is that your debts are paid off, or they're very close to it. Debt-free living, financial freedom, or whichever way you choose to refer it, means you've fulfilled all or most of your obligations, and you'll be under much less strain in the years ahead.

How can I maximize my Social Security benefits at 62? ›

Working for 35 years or more will help ensure you get the most money when your benefit amount is calculated. Earn as much as you can right up until full retirement age (or past it) to max out your benefit. If you wait until age 70 to claim, you can increase your benefit by 8% a year beyond your full retirement age.

Is it better to take Social Security at 62 or 67? ›

You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase.


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