Pamela Kweller RSSA Staff

Retirement and collecting Social Security benefits are two different things. You can retire from work and collect Social Security benefits. You can retire from work, but delay collecting Social Security benefits. Or you can even collect Social Security benefits while continuing to work.

Working While Collecting Benefits

If you choose to work and collect benefits at the same time, your benefit may be reduced depending on your age and income. 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.

Keep in mind that while your benefit will be reduced during that time, the money is not truly lost. According to the SSA, “Your benefit will increase at your full retirement age to account for benefits withheld due to earlier earnings.”

Working while collecting benefits even has the potential to increase your benefits. Your retirement benefits are calculated using the highest 35 years of your earnings. If you worked less than 35 years, the Social Security Administration will include zeros for years with no earnings. The SSA 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 recalculate your benefit and retroactively pay you any increase you are due.

The Retirement Earnings Test

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.

You may be wondering what counts as earnings or income. 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.

Access your earnings

The Social Security Administration has a written record of all your earnings under your name and Social Security number. You can access your personal earnings record by visiting your mySocialSecurity account. If you don’t have an account, you can create one for free at ssa.gov. You may also receive a Social Security statement in the mail which will include your earnings history.

It is important that you take a look at the information on your record and make sure the details are accurate because your earnings history has a direct impact on the benefits you (and your family) are entitled to.

Contact the Social Security Administration if you need to correct your earnings record for any reason. While your benefit may be reduced if you are earning income while collecting, it is better to let the SSA know right away rather than owing money later down the line.

The SSA also notes that there are different rules regarding employment and Social Security disability benefits or Supplemental Security Income payments. Additionally, there are different rules applicable to people working outside the United States.

Whether you plan to work or not while collecting Social Security, a personalized Social Security plan can help you maximize your benefit. Visit RSSA.com to learn more about working with a professional and getting your personalized analysis and plan.