Returning to work after retirement? This could reduce your Social Security by $239 per month starting in 2025.

Retirement can be incredibly expensive, and it’s not uncommon for older people to continue working in some capacity later in life. In fact, as many as 75 percent of workers expect to work for pay after retirement, according to a 2024 report. of the Employee Benefit Research Institute.

However, working while receiving Social Security can affect the amount of your benefit. The average working retiree could see their checks cut by about $239 a month, and depending on your income, most of your benefit could even be withheld. Here’s what to expect in 2025.

If you continue to earn income after you take Social Security and you are below your full retirement age (FRA), your wages will be subject to the retirement income limit. When your income exceeds this limit, your benefits will be reduced in the years leading up to your FRA.

To determine if your benefits will be reduced, you must first know your exact FRA and your earnings for the year. Your FRA will depend on your year of birth, but is between 66 and 67 for everyone.

There are two earnings limits: one for those who will be well below their FRA in 2025, and a second for workers who will reach their FRA the following year.

Source: Social Security Administration. Table by author.

In 2024 full-time workers age 65 and older earned an average salary of about $58,292 a year, according to data from the Bureau of Labor Statistics. Let’s say, for example, that you only work part-time in retirement while earning half that amount, or $29,146 a year.

Let’s also say you’re 65 with an FRA of 67. These numbers will put you at the lower income limit because you won’t reach your FRA in 2025. Your income in this case would be $5,746 above the annual limit, a reduction of your benefits by $2,873 per year, or about $239 per month.

The more you earn in retirement, the more drastic your benefit cuts will be. In extreme cases, you may even be withheld from the full benefit amount. The good news, though, is that your benefit will be recalculated into your FRA and you’ll get bigger checks for the rest of your life.

The retirement income test is designed so that in theory you should recover any benefits that have been withheld. So while these reductions can be severe in the short term, you’re not really missing out on anything, assuming you spend a significant amount of time in retirement.

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