Working While on Social Security
You can receive Social Security retirement benefits and work at the same time, but your monthly benefits may be temporarily reduced. If you’ve reached full retirement age, working will not affect your Social Security benefits, no matter how much you earn.
What Is Full Retirement Age?
You can collect Social Security benefits and work at the same time, but your benefits may be reduced if you haven’t reached your full retirement age yet.
Once you hit full retirement age, there is no limit on how much you can earn while working on Social Security.
Your full retirement age depends on the year you were born.
|Birth Year||Full Retirement Age|
|1955||66 and 2 months|
|1956||66 and 4 months|
|1957||66 and 6 months|
|1958||66 and 8 months|
|1959||66 and 10 months|
|1960 and later||67|
You may opt to start receiving your Social Security retirement benefits before full retirement age. The soonest you can claim benefits is at age 62.
How Much Can You Earn While Receiving Social Security?
If you start collecting Social Security prior to full retirement age, you can earn up to $18,960 in 2021 and still receive your full benefits.
After you hit that threshold, Social Security deducts $1 from your benefits for every $2 you earn.
In the year you reach full retirement age, you can earn more money without jeopardizing your benefits.
In 2021, you can earn $50,520 a year. After that, Social Security deducts $1 for every $3 you earn — but only during the months before you reach full retirement age.
Once you hit full retirement age, you can earn any amount of money without impacting your monthly benefit.
For example, if your full retirement age is 67 and your birthday is in September, you can earn $50,520 from January through August. Starting in September, you can earn as much as you want.
If you earn more while working than the income limits mentioned above, it’s important to notify Social Security.
Otherwise, the Social Security Administration will learn about your excessive earnings when you file taxes the following year. If this happens, you may be fined, forced to pay back the difference or receive reduced future benefits.
Social Security Payments Are Withheld Temporarily
Social Security can dock your benefits if you earn above a certain amount, but you may recoup some of these losses.
If your retirement benefits were withheld due to excessive earnings, your monthly Social Security check will increase to account for the months your benefits were withheld once you reach full retirement age.
However, these benefits won’t return to you in a simple lump sum. The way Social Security recalculates your benefits is complicated.
Here’s an example.
Let’s assume you were born in March 1959. Your full retirement age is 66 and 10 months, but you start claiming benefits when you’re first eligible at age 62.
The difference between when you started collecting benefits and your full retirement age is 58 months.
Claiming benefits early reduces your check by 29.17 percent.
Your monthly benefit is $708 and you earn $25,000 a year through a part-time job. Social Security will withhold $3,020, or the equivalent of roughly 4.2 months of benefits lost.
Let’s assume you end up losing the equivalent of 10 months of benefits by the time you hit full retirement age.
Once you reach full retirement age, Social Security will reset your benefits as if you’d retired 48 months early rather than 58 months early.
This helps boost your Social Security check for 10 months, or the number of months you went without benefits.
Another important thing to keep in mind is that your Social Security benefits are based on your highest 35 years of earnings.
If your latest year of earnings ends up being one of your highest, the Social Security Administration will refigure your benefit and pay you any increase due.
For more information about working and Social Security benefits, check out the SSA’s How Work Affects Your Benefits booklet.
Social Security Benefits and Income Taxes
If Social Security is your only income, you likely won’t pay taxes on your benefits.
But things can get more complex if you return to work and start earning money.
To determine how much of your check is taxable, the Social Security Administration uses a term called “combined income.”
Combined income is the combination of your adjusted gross income, nontaxable interest and half of your Social Security benefit.
If you file as single and your combined income is below $25,000, your Social Security benefits will not be taxed.
If your combined income is between $25,000 and $34,000 for a single filer, up to 50 percent of your benefits are taxable.
If your combined income is more than $34,000, up to 85 percent of your benefits are subject to federal income tax.
Regardless of your income level, no more than 85 percent of your Social Security benefits can be taxed.
7 Cited Research Articles
- Social Security Administration. (2020). How Work Affects Your Benefits. Retrieved from https://www.ssa.gov/pubs/EN-05-10069.pdf
- Hartman, R. (2019, June 5). What Happens if You Work While Receiving Social Security. Retrieved from https://money.usnews.com/money/retirement/social-security/articles/what-happens-if-you-work-while-receiving-social-security
- AARP. (n.d.). Can I work and still get Social Security? Retrieved from https://www.aarp.org/retirement/social-security/questions-answers/working-while-collecting-social-security.html
- AARP. (n.d.). Social Security is withholding money from my retirement benefit because I'm still working. Will I get that money back? Retrieved from https://www.aarp.org/retirement/social-security/questions-answers/withholding-while-working.html
- Social Security Administration. (n.d.). Income Taxes And Your Social Security Benefit. Retrieved from https://www.ssa.gov/benefits/retirement/planner/taxes.html
- Social Security Administration. (n.d.). Retirement Basics. Retrieved from https://www.ssa.gov/benefits/retirement/planner/whileworking.html
- Social Security Administration. (n.d.). Starting Your Retirement Benefits Early. Retrieved from https://www.ssa.gov/benefits/retirement/planner/agereduction.html