Will my 1099 contractor income reduce my Social Security benefits if I'm under FRA?

Yes, the Social Security Administration absolutely counts self-employment income (1099 work) toward the annual earnings limit if you're under your Full Retirement Age. For 2025, the limit is around $22,560 (the 2024 limit plus COLA). If you earn more than that, SSA will withhold $1 in benefits for every $2 you earn above the limit. And be aware - for self-employment, the SSA looks at your net earnings after business expenses, not your gross income. Keep good records of legitimate business expenses to lower your countable income. Also important: Only the months you actually work matter. If you start benefits but don't work for part of the year, you might qualify for a special monthly earnings test in your first year.

When I retired at 62, I had the same question! I started doing some handyman work on the side and getting paid as a contractor. I learned that ANY income counts against you before full retirement age - both W-2 and 1099. The Social Security office was a NIGHTMARE to deal with - took me DAYS of calling to get through to someone! I finally found this service called Claimyr that got me through to an actual SSA agent in under 10 minutes (https://claimyr.com). There's a video showing how it works: https://youtu.be/Z-BRbJw3puU - seriously saved me hours of frustration. The agent explained everything about how the earnings test works for self-employment.

im self employed and on SS. they def count it but heres the thing - u can write off a lot of business expenses which lowers ur taxable income. things like home office, travel, supplies, computer stuff. thats how i keep under the limit even tho i make decent $$. talk to a tax person its worth it.

There's an important distinction you should understand. The earnings test counts EARNED income only - whether W-2 or 1099 doesn't matter, but it's how you earn it that counts. For 1099 contractors, Social Security uses net earnings from self-employment (after deducting business expenses but before income taxes). They also only count the money when it's earned, not when it's paid, which can be important for planning. Also, in the calendar year you reach Full Retirement Age, the earnings limit is much higher (about $59,520 for 2025), and they only count earnings from months BEFORE the month you reach FRA. Then once you reach FRA, there's NO limit on earnings.

I went through this EXACT situation last year!!! The SSA withheld some of my benefits because of my contract work and it was a MESS trying to figure it all out. They don't make it easy to understand how much they'll take or when. I ended up with some months where I got no payment at all, which I wasn't expecting! Just be prepared that they might withhold entire monthly payments rather than taking a little each month.

One more critical point about this situation: When SSA withholds benefits due to excess earnings, those withheld benefits aren't lost forever. Once you reach Full Retirement Age, SSA will recalculate your monthly benefit amount to give you credit for the months benefits were withheld. This results in a permanent increase to your monthly benefit amount going forward. So while you might lose some benefits now due to working, you'll get some of that back through higher monthly payments for the rest of your life after reaching FRA.

My husband started his SS at 62 and kept working part time as a contractor. The earnings limit was a headache! But we learned you can estimate your earnings for the year and SS will adjust your benefits proactively instead of making you pay it back later. Might be worth calling them to set that up if you know approximately what you'll earn.

Don't forget that if you're self-employed, you still have to pay BOTH sides of Social Security taxes (the full 12.4% for FICA instead of just the employee half)! That surprised me when I started 1099 work while on benefits. So factor that into your calculations about whether the contract work is worth it financially.

wait i thought there was a special rule for the first year you claim benefits?? something about a monthly limit instead of annual?

Thank you all so much for the helpful information! Based on what everyone has shared, I think I'll take the consulting work but try to keep good records of business expenses to lower my countable income. I'll also contact SSA to let them know my estimated earnings so they can adjust my benefits proactively rather than having surprising months with no payment. It's also reassuring to know that any benefits withheld now will increase my payment amount after I reach full retirement age. That makes the decision easier since the money isn't completely lost. Really appreciate all the advice!