Key facts
- Individuals receiving Social Security benefits are still required to pay Social Security taxes on their wages if they are working.
- The requirement to pay Social Security taxes applies regardless of age or whether benefits are being collected.
- There is an annual wage cap limiting the amount of income subject to Social Security taxes.
- Benefits may be withheld if earnings exceed a certain threshold before reaching full retirement age (FRA).
- Upon reaching FRA, Social Security benefits are adjusted to account for any previously withheld amounts.
- Working after FRA does not result in benefit withholding.
Many individuals who continue to work after beginning to collect Social Security benefits are surprised to find they are still required to pay Social Security taxes on their earnings. This requirement applies regardless of age or benefit status, with the exception of narrow religious exemptions. The Social Security system mandates that all workers pay taxes on their wages up to an annual wage cap, which was $168,600 in 2024.
Eligibility for Social Security retirement benefits begins at age 62, but claiming benefits before one's full retirement age (FRA) results in a permanent reduction of the monthly benefit amount. For those who claim early and continue to work, there is an earnings-test limit. If their income exceeds this threshold, a portion of their Social Security benefits will be withheld until they reach FRA. For instance, in 2026, the cap is $24,480, and benefits are reduced by $1 for every $2 earned above that amount.
However, once an individual reaches their FRA, there is no longer a limit on earnings, and benefits are not withheld. The Social Security Administration adjusts benefits to account for any prior withholding due to the earnings limit. This adjustment, along with any increase in the benefit amount due to higher-earning years being factored into the lifetime average, typically begins the January following the individual's FRA. The taxes paid by all working individuals, including those collecting benefits, are crucial for maintaining the solvency of the Social Security system.