Working While on Social Security? 3 Things You Need to Know

Many people file for Social Security once they stop working and collecting a paycheck. But you may be interested in working while receiving benefits. Here’s what you need to know if you’ll be going that route.

1. You’re absolutely allowed to do it

There’s nothing to stop you from working and collecting Social Security benefits at the same time. In fact, doing so could be a good way to transition into retirement.

Imagine you currently work full-time but are nearing the point when you want to retire. It may be a shock to your system to go from working 40 to 50 hours a week to suddenly having no job obligations at all. And so a better approach may be to transition into retirement by scaling back your hours on the job.

Doing so, however, could result in a drop in income that makes it difficult to pay your bills. And so in this case, filing for Social Security while still working could make a lot of sense.

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2. Doing it before full retirement age could affect your benefits

Once you reach full retirement age (FRA), which begins at age 66, 67, or somewhere in between, depending on your year of birth, you can work and earn any amount of income without it impacting your Social Security benefits. But if you work and collect Social Security simultaneously before reaching FRA, you could risk having some benefits withheld.

Each year, there’s an income threshold established called the earnings-test limit. If you exceed that limit, you forgo some immediate Social Security income but get that money back later, once you reach FRA.

In 2022, the earnings-test limit is:

$19,560 if you won’t be reaching FRA in 2022
$51,960 if you will be reaching in 2022

Beyond these threshold, you should expect to have some of your benefits withheld.

3. Working in retirement could benefit you — and not just financially

Many people hold down part-time jobs once they leave their careers behind. And once you reach FRA, as mentioned, there’s zero impact to your Social Security benefits at all, so there’s no reason not to go this route.

Quite the contrary — working during retirement could work wonders for your senior years. First of all, if you don’t have much in the way of savings, that paycheck could serve as a nice supplement for your Social Security income.

Just as importantly, working will give you something interesting and meaningful to do with your time. Many seniors have difficulty adjusting to a lack of structure after wrapping up their careers. And so it may be worthwhile for you to get a job even if you don’t really need the money.

Social Security is a pretty flexible program — you can claim benefits throughout a multi-year window, delay benefits for a higher paycheck, and collect benefits even when you have money coming in from a job. But if you’re going to go the latter route, it’s important to understand the rules involved so you make the right decisions.

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