There are a few things to keep in mind as you decide whether to wait to receive Social Security benefits once you retire or earn them as you work.
For those inching closer to the retirement age, eventually collecting Social Security benefits is probably on the mind. You might be wondering whether or not you can start collecting Social Security benefits while you continue to work. The short answer is yes, with a few stipulations.
People who were born on or after Jan. 2, 1960, have a full retirement age of 67. If you work and are older than the retirement age, you can keep all your benefits with no reductions. People under 67 can collect benefits as they work, but their Social Security earnings will be significantly reduced.
The Social Security Administration stresses that, though your benefit amount may be reduced, it isn’t lost. “Your benefit will increase at your full retirement age to account for benefits withheld due to earlier earnings,” the SSA writes in a guide.
What if I am under the full retirement age?
If you are under the age of 67, you can still collect benefits but the amount you collect will be significantly reduced based on how far away you are from 67 and how much you are currently earning. The SSA counts your earnings as the wages you earn from your job or your net earnings if you are self-employed. Bonuses, commissions and vacation pay are counted, while pensions, annuities, investment income, interest, veterans, government or other military retirement benefits are not.
If you are under the retirement age for the full year, the Social Security Administration deducts $1 for every $2 a person earns above the annual limit; this year’s annual limit is $19,560. During the year that a person reaches their full retirement age, the SSA will deduct $1 for every $3 a person earns above a different limit, which is $51,960 for 2022. The month you hit your full retirement age you can earn benefits with no earning limits.
Can my benefits increase while I work?
They might. As long as you continue to work, you will continue paying Social Security taxes on your earnings. This even applies to those who are receiving benefits as they work. The SSA checks your earnings to determine whether your monthly benefits need to be increased. If that’s the case they will contact you and notify you of your new benefit amount.
What if my earnings change after I start receiving benefits?
You will need to contact the SSA immediately. The SSA says you cannot report a change in your earnings online. You will need to contact the SSA either by phone (1-800-772-1213, 8 a.m. to 7 p.m. EST, Monday through Friday) or contact your local Social Security office.
How do I apply for retirement benefits?
Once you’re ready to retire, visit the SSA’s online retirement application to learn about your own benefits, see if you’re eligible, plan for retirement and apply. If you don’t know which materials you need to apply for retirement, here’s a checklist to easily keep track of your materials prior to the application.