Working While Collecting Social Security: Benefits and Risks

Many individuals postpone claiming Social Security until retirement. However, working during retirement can provide significant advantages.

Firstly, an additional income stream can enhance financial flexibility and security.

Furthermore, working can act as a social outlet. For retirees lacking a strong local network, a job offers regular interaction with others.

Additionally, maintaining a job may aid in establishing a structured retirement routine.

Many retirees wonder whether they can work and simultaneously receive Social Security benefits. The answer is yes, you can.

The Surprising Upside of Working While on Social Security

Your Social Security benefits depend on various factors, including your earning history and your age at filing. You can start claiming benefits at 62, but they will be reduced until you reach full retirement age, which is 67 for individuals born in 1960 or later.

Your 35 highest-paid years of income are used to calculate benefits. If you begin receiving benefits before accumulating a full 35-year work history, each missing year is counted as $0 income. However, working part-time while currently receiving benefits can improve your future payouts.

For instance, if you’re new to Social Security and have only a 33-year work history, earning $20,000 could replace a year of zero income, potentially raising future benefits.

One Significant Pitfall to Consider

While you’re permitted to work and collect Social Security simultaneously, doing so prior to your full retirement age subjects you to an earnings test. Earnings above a certain threshold can lead to reductions in your Social Security checks.

In 2025, if you earn over $23,400, you’ll lose $1 in Social Security for every $2 above that limit. If you reach full retirement age this year, the threshold rises to $62,160, where you lose $1 for every $3 earned.

This earnings test only applies if you claim benefits before reaching full retirement age. However, note that any withheld benefits are not permanently lost; they are compensated with larger monthly checks in the future.

Overall, working in retirement can have positive implications. It is crucial to be aware of how employment may impact your Social Security benefits, both positively and negatively.

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