Whether you are approaching retirement or have a parent who will be retiring soon before reaching full retirement age, there are income sources you should know about that give you extra cash in your pocket while not reducing your SS income.
Note: The SSA refers to your monthly benefit check as your primary insurance amount (PIA). This article will use both terms.
Full Retirement Age
Before discussing the income sources, it is important to know your full retirement age (FRA), which isn't the same for everyone. Any income you make from working after your FRA does not count against your PIA. How's that for a mouthful of acronyms?
If your birth year is 1960 or later, your full retirement age is 67. Anyone born between 1955 and 1959 has a full retirement age between 66 and 67 – that is, 66 plus a certain number of months. For example, if you were born in 1958, your FRA is 66 and eight months.
Here's a breakdown of Full Retirement Ages (FRA) so you can see when you would be able to get full SS benefits and still earn income by working without a reduction.
Birth Year | Full Retirement Age |
1943-1954 | 66 years |
1955 | 66 and two months |
1956 | 66 and four months |
1957 | 66 and six months |
1958 | 66 and eight months |
1959 | 66 and 10 months |
1960 and later | 67 years |
If you do work while taking PIA before your FRA, the SSA may deduct some money from your benefit.
For the 2025 tax year, your benefit will be reduced by $1 for every $2 you earn above the earnings limit of $23,400. In the year you reach your FRA, you may earn up to $62,120 (these amounts change each year) without losing benefits. Earn more than the earnings limit, and SSA will dock you $1 for every $3 you earn.
Once you reach FRA, you can earn as much as you'd like without any penalty.
Income That Doesn't Count Before FRA
Here are the sources of income that will not negatively impact your benefits.
Income from Interest or Dividends
The interest or dividends you make from investments in stocks, bonds, and savings accounts.
IRA Payments
Funds you withdraw from your individual Retirement Account (IRA).
Pensions or Other Retirement Pay
If you are lucky enough to have worked for a company that pays a pension, or you take distributions from a Roth IRA, these do not reduce your PIA. The IRS requires a five-year waiting period if you have converted a regular IRA to a Roth IRA, though, so you need to keep an eye on that so as not to trigger ordinary income tax, a 10% penalty, and the application of these amounts to your SSA income limit.
Rental Property Income
This doesn't apply if the money you earn from rental properties is part of your full-time job - if you are a real estate broker, for example.
Inheritance or Gifts
Not only will this not negatively impact your PIA, you may not have to pay income tax on the amount you receive, depending on the state in which you reside. Virginia does not have estate taxes as of July 1, 2007, though certain remainder interests are still subject to an inheritance tax.
Certain VA Benefits
Disability or compensation does not reduce PIA before FRA.
Royalties
If you've copyrighted or patented something you created and receive royalties, they will not reduce your PIA, but only during the year you turn your FRA. Income from royalties will apply to your limit prior to this year.
Unemployment Benefits
If you lose your job while receiving PIA prior to your FRA and receive an unemployment check, that income does not count toward your earnings limit. However, that you are receiving PIA will determine the amount of your unemployment check. It would be wise to talk to your state's unemployment office to learn the impact.
Workers' Compensation Benefits
If you are still working and receiving PIA, get injured on the job and qualify for workers' compensation, this income will not lower the PIA.
Exempt Trust Funds and Annuities
If you have income from tax-exempt trust funds or annuity payments, these will not count towards your earnings limit. It is the source of the funding for the trust and annuity that determines its tax-exemption status, and not all tax-exempt funds qualify. Check with your financial advisor prior to taking distributions if you are receiving PIA.
Awards, Prizes, Lottery Winnings
Length of service awards, achievement awards, and Mega Millions payouts do not count against your income limit. You have to receive these as an individual, not as a business.
While it pays to delay taking Social Security benefits until you reach your FRA, everyone's circumstances are different. Consult with a Financial Advisor to determine the best financial course for you or your parents, and enjoy the golden years!
Sources: Smart Asset, Finance Buzz Money, Social Security Administration, Virginia Department of Taxation, AccountingInsights.com, Financial Ducks In A Row
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