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, there are a few things that you do need to know.
There Are Not Any Social Security Work Penalties if You Are 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 your full retirement age, you can earn as much money as you like without incurring any penalties.
Your full retirement age is determined by your birthday. For reference: If you were born January 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 website.
What Are the Social Security Work Penalties If I Am Younger Than My Full Retirement Age?
If you decide to collect Social Security benefits and work at the same time when you are younger than your full retirement age, the may be penalties, depending on how much you earn.
More Than a Year Under Your Full Retirement Age
If you are younger than full retirement age during all of the year, the Social Security Administration will deduct $1 from your Social Security paycheck for every $2 you earn above the annual limit. For 2024, that limit is $22,320.
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 Your 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 can 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 or not, if you are working, you will continue to pay Social Security taxes on your earnings.
The good news here is that your additional earnings could potentially increase your Social Security benefit amount. Social Security will check your record every year and will notify you if you have achieved a higher benefit amount.
When Should You Start Social Security Benefits?
The general rule of thumb is that you should delay the start of Social Security benefits as long as possible, regardless of whether you intend to work or not.
This is because the earlier you start, the smaller your monthly benefit check will be.
Use the NewRetirement Planner – the best most comprehensive online planning platform – to help you determine the best time for you to start benefits.
This powerful tool can tell you exactly how your cash flow, net worth, out-of-savings age and debt situation will be impacted by different Social Security benefit amounts and start ages. The tool even factors in penalties for any work income received before full retirement age.
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.
Not sure how long you need to work? Use the NewRetirement Planner to assess your income and savings needs. See how work income impacts your long term retirement plan.
You may also want to explore more information about best jobs for seniors, benefits of work, and tips for delaying retirement.
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