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Can rental income reduce Social Security benefits?

No. Social Security only counts income from employment towards the retirement earnings test. Other kinds of income — including income from rental properties, lawsuit payments, inheritances, pensions, investment dividends, IRA distributions and interest — will not cause benefits to be reduced.

In 2021, for people who claimed benefits before full retirement age (currently 66 and 2 months and gradually rising to 67), Social Security withholds $1 in benefits for every $2 earned above the annual limit of $18,960. (A different formula applies for the year a beneficiary reaches full retirement age.) Earnings made as an employee, net earnings from self-employment, and work-related bonuses and awards count toward the limit. 

Keep in mind

The earnings cap goes away after full retirement age — from then on, income level has no effect on Social Security benefits.

Updated December 28. 2020

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