Benefits Eligibility

TO BE ELIGIBLE for Social Security, you need to have worked and paid Social Security payroll taxes for at least 10 years, so you earn the required 40 credits. Your benefit is calculated based on your 35 years with the highest earnings. If you don’t work for the full 35 years, you are still eligible for Social Security, but your benefit will be lower.

If you claim benefits before your full Social Security retirement age, which will be either age 66 or 67, your benefit will be reduced if you’re still working and your earnings are above certain thresholds. This is the so-called retirement earnings test. At issue here are earnings from paid employment, not income such as interest from your bond portfolio or withdrawals from your retirement accounts.

In 2025, if you earn more than $23,400, you will lose $1 of Social Security benefits for every $2 you earn above this threshold. In the year you reach your full Social Security retirement age, the threshold is more generous. You will lose $1 of benefits for every $3 you earn above $61,160. The earnings test only applies up until the month you reach your full Social Security retirement age.

Sound bad? It isn’t as bad as it seems: Once you reach your full retirement age, your monthly benefit will be increased to reflect the benefits that were lost because of the earnings test.

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