Editor’s Note: After a long career in the data processing industry, Russell Gloor joined the Association of Mature American Citizens in 2013. Gloor received training from the National Social Security Association and was accredited by the NSSA® as a Social Security adviser in 2016. Currently part of the AMAC Foundation’s Social Security Advisory team, he annually counsels thousands of American seniors about their Social Security options. In addition to answering Social Security questions daily, he also authors the AMAC Foundation’s nationally syndicated weekly “Ask Rusty” advice column and has written three Social Security instructional books about Social Security.

Dear Rusty: I opted to draw my Social Security retirement benefit early and work part time. The company I work for has decided to pull me from field work due to my age and health. Although they are great keeping me at 20 hours per week running for parts and doing office work, I’m not sure how much longer it will last. I’m thinking of taking a taxi driving job to keep my income enough to live on. The way it would work, I would lease the cab for some amount of dollars per day, set my own hours to work and collect anywhere from $1.40 to $4 per mile, depending on what type of fare. My question is: how does Social Security look at that type of employment? Would I be held to the 15-45 hours a month standard? I could never come close to making the $1,200 to $1,300 a month I need by working so little. Any advice is greatly appreciated. Signed: Seeking Advice

Dear Seeking:

If you go ahead with your plan to lease a taxicab instead of continuing your current employment, you would, in effect, be considered “self-employed” and would submit your income tax return to the IRS accordingly. Social Security would get your earnings information as reported to the IRS, and it would be your net earnings from self-employment (after deducting all your business expenses) that is reported to Social Security Administration by IRS. There is, however, a special rule which would apply to you in your first calendar year of self-employment while collecting early Social Security benefits.

Since, in your first year, some of your earnings would be as a part-time employee paying Social Security FICA payroll taxes, Social Security would first look at your earnings as an employee to see if you exceeded the annual earnings limit ($23,400 for 2025). Then, upon starting your self-employment, Social Security would look at the hours you spent performing “substantial gainful activity” (e.g., driving your taxi) each month and, if you spent more than 45 hours per month in that capacity, you would not be considered “retired,” and thus, not eligible for Social Security in any month you exceeded that amount of hours. If you earned less than the annual limit in total (both as an employee and while self-employed), you would get benefits for all months of the year. But if you earn more than the annual limit, you will get no benefits for any month you exceeded 45 hours as a self-employed person. Again, this only applies during the first calendar year of self-employment – in the following year only your net earnings from self-employment would count toward the annual earnings limit.

In effect, Social Security Administration would use the hours-worked standard to see if you are truly retired or actually working. If the latter, they would withhold Social Security monthly benefits for any month you exceed 45 hours working while self-employed (up to and including December of your first calendar year of self-employment), and only if your total income (as an employee and while self-employed) exceeds the annual limit.

So, if your goal is to net $1,200-$1,300 per month as a self-employed taxi driver, that would be well within the limits of the annual earnings test ($23,400 for 2025 but changes yearly). But there may, or may not, be a reduction in your Social Security benefits during your first year of self-employment, depending on when you start as self-employed. Note that Social Security Administration will ask about your work plans when you apply, and if you expect to stay under the annual limit (working part time in both capacities), you should get full Social Security benefits. Just be careful to stay under the annual earnings limit for those collecting early Social Security benefits. For your information, earnings from before your Social Security benefits started don’t count toward the earning limit.

Note, too, your monthly Social Security benefit will be actuarially reduced according to how far in advance of your full retirement age you claim Social Security. Whenever Social Security benefits are claimed prior to one’s full retirement age, those benefits are permanently reduced.

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association. NSSA® and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit their website (amacfoundation.org/programs/social-security-advisory) or email ssadvisor@amacfoundation.org.