Can you work while collecting Social Security? Yes, you can work and earn income while collecting Social Security benefits. However, your benefit may be reduced depending on your age and income.
How will working impact my Social Security benefits? If you are working while collecting, and are between the ages of 62 and Full Retirement Age (FRA), you will be subject to the Retirement Earnings Test. During this time, if you earn more than the earnings limit for that year, your Social Security benefit will be reduced. While your benefit will be reduced during that time, the money is not truly lost. Your benefit will increase at your Full Retirement Age to account for benefits withheld during that time.
How does the Retirement Earnings Test Work? There are two earnings limit thresholds. In 2022, the lower earnings limit is $19,560. The lower threshold applies to those who are age 62 up to the year they reach FRA. The reduction is $1 in benefits for every $2 you earn exceeding the lower limit. In 2022, the upper earnings limit is $51,960. The upper threshold applies to earnings in the year you turn your FRA. The reduction is $1 in benefits for every $3 you earn exceeding the upper limit. The earnings limit no longer applies starting the month you turn your FRA. This means you can collect Social Security benefits and work without having a reduction in benefits.
What are considered as earnings? If you are employed, your wages you make from your job are considered your earnings. If you are self-employed, your net earnings count as your earnings. Bonuses, commissions, and vacation pay are included as earnings, while pensions, annuities, and investment income are not.
Is there a financial benefit to working while collecting? Working while collecting benefits has the potential to increase your benefits. Your retirement benefits are calculated using the highest 35 years of your earnings. The Social Security Administration reviews the earnings records of all Social Security beneficiaries with reported wages from the previous year. If the previous year of earnings is one of your highest 35 years, the SSA will replace your lowest earnings with the new earnings and recalculate your benefit. The SSA will then retroactively pay you any increase you are due.
Learn more about working and Social Security.