Editor’s Note: This story originally appeared on NewRetirement.
Social Security and working: Believe it or not, the two are more or less completely compatible with each other.
You can absolutely get Social Security retirement benefits and work at the same time. However, following are a few things that you do need to know.
There are no Social Security work penalties if you have reached your full retirement age
There are no penalties for receiving Social Security and working at the same time if you have reached your full retirement age.
After reaching your full retirement age, you can earn as much money as you like without incurring any penalties.
The Social Security Administration determines your full retirement age by your birthday. For reference: If you were born Jan. 2, 1960, or later, then your full retirement age is 67.
It is important to note that the rules described here are for Social Security retirement benefits. There are different rules for disability or supplemental security income payments.
For more information, you can consult the Social Security Administration’s Retirement Benefits Planner webpage.
What are the Social Security work penalties if I am younger than my full retirement age?
If you decide to start collecting Social Security benefits and work at the same time when you are younger than your full retirement age, there may be penalties, depending on how much you earn.
What happens if you’re more than a year under your full retirement age?
If you’re younger than full retirement age during all of the year and still working, the Social Security Administration will deduct $1 from your Social Security benefits check for every $2 you earn above the annual limit.
For 2024, that limit is $22,320.
What happens the year you reach your full retirement age?
In the year that you reach your full retirement age, Social Security will only deduct $1 for every $3 you earn up until the month before you reach full retirement age.
Beginning with the month you reach full retirement age, your earnings will no longer reduce your benefits, no matter how much you earn.
And, Social Security will recalculate your benefit amount to give you credit for the months when benefits were reduced or withheld due to your excess earnings.
You will likely recoup any of these work penalties
According to the Social Security Administration’s guidance, “Your benefit will increase at your full retirement age to account for benefits withheld due to earlier earnings.”
So, you could kind of think of the penalties as another way to save for your future.
What counts as work earnings?
If you are under your full retirement age and working, you are probably concerned about what exactly counts as work earnings.
The following income sources count as earnings:
- Wages from a job
- Net earnings if you are self-employed
- Bonuses, commissions and vacation pay
- Employer contributions to a pension or retirement plan if the contribution amount is included in the employee’s gross wages
Income that is not counted includes pensions, annuities, investment income and capital gains, interest and veterans or other government or military retirement benefits.
Social Security and working: You will always pay Social Security taxes
No matter your full retirement age and whether or not you are paying work penalties, if you are working, you will continue to pay Social Security taxes on your earnings.
The good news here is that those additional earnings could potentially increase your Social Security benefit amount.
The Social Security Administration will check your record every year and will notify you if you have achieved a higher benefit amount.
When should you start receiving Social Security benefits?
The general rule of thumb is that you should delay the start of your Social Security benefits as long as practical, regardless of whether you intend to be working or not.
This is because the earlier you start, the smaller your monthly benefit check will be until you reach full retirement age. Benefit amounts also increase for each year after full retirement age that you wait until age 70.
Use the NewRetirement Planner — the most comprehensive online planning platform — to help you determine the best time for you to start benefits.
How long should I work?
There are so many benefits to work: staying engaged, social connection, mental stimulation — and, of course, income.
You should work as long as you need to and as long as you want to.
