Social Security defines “earned income” as the salary of a job or the net income from self-employment, and only takes into account earned income when calculating whether and to what extent you should withhold your benefits. It doesn't take into account pensions, retirement account distributions, annuities, or interest and dividends on your savings and investments. Similarly, contributions to your IRA or 401 (k) cannot be deducted from income for income testing purposes. Social Security uses your gross income before tax-deferred allowances to determine your income.
AARP is a nonpartisan nonprofit organization that allows people to choose how to live as they age. Your email address is now confirmed. Pension payments, annuities, and interest or dividends on your savings and investments are not earnings for Social Security purposes. You may have to pay income taxes but not pay Social Security taxes.
Your 401 (k) plan withdrawals are not counted as earned income. Likewise, your Social Security income is not considered earned income either. In reality, neither 401 (k) plan distributions nor Social Security benefits qualify as earned income because they are not derived from wages you earn while working for someone else or running your own business when you receive them.