Earnings Limit for Beneficiaries Under the Full Retirement Age

Background

Social Security rules limit the amount of earnings a worker can earn while maintaining the payment of full benefits. In 2019, workers under full retirement age who receive Social Security benefits and earn above $17,404 face some reduction in benefits. (For workers below the full retirement age, benefits are reduced by $1 for every $2 earned over that threshold.) Workers who receive reduced benefits because of the earnings limit will receive increased benefits once they reach the full retirement age. Over a person’s lifetime, the increase in benefits will offset the reduction due to the earnings limit.

Some policymakers advocate raising or eliminating the earnings limit for those younger than the full retirement age. This could induce some individuals who have already claimed Social Security benefits early to remain in the workforce (or work additional hours). At the same time, it could induce other workers, those between age 62 and full retirement age, to begin claiming Social Security benefits (because there is no longer a penalty for receiving benefits while working).

EARNINGS LIMIT FOR BENEFICIARIES UNDER THE FULL RETIREMENT AGE: Policy

Altering the earnings limit

In this policy: Federal

Policymakers should change or eliminate the Social Security earnings limit only if the Social Security trust funds can be maintained and there would be no adverse impact on the financial well-being of retirees or their spouses over the short and long terms.