Can You Work and Collect Social Security?

 

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Reviewed by Anthony BattleReviewed by Anthony Battle

If you’re eligible for Social Security, you can start to collect retirement benefits even if you are still working as early as age 62. However, drawing a salary may reduce the benefit you can claim until you reach your full retirement age.

Key Takeaways

• You can claim Social Security benefits at 62, below full retirement age, and still work.
• Benefits are temporarily reduced for those who haven’t reached their full retirement age.
• After reaching full retirement age, there’s no limit on how much you can earn while collecting full benefits.

Retirement Age and Social Security

Collecting benefits at age 62 until full retirement age will incur penalties. Unless you’ve reached your full retirement age of 66 or 67, you’ll have a permanently reduced benefit and if you have earnings from work, benefits will be temporarily reduced.

According to the Social Security Administration (SSA), the full retirement age in the U.S. is 66 years and four months if you were born between 1943 and 1956, and retirement age phases up to 67 years for those born in 1960 and beyond.Full retirement age means you qualify for 100% of your benefits based on your earnings history.

Important

The reduction in Social Security benefits is based only on earned income. Unearned income, such as from pensions or investments, doesn’t count.

Calculating Your Benefit

The amount you receive in Social Security benefits is based on an average of the 35 highest-earning years. For 2024, Social Security will deduct $1 of every $2 you earn over $22,320 if you are under full retirement age. During the year you reach full retirement age, it will deduct $1 for every $3 you earn over $59,520 until the month you reach full retirement age. After that, you’ll receive your entire benefit.

Note that any money Social Security withholds from your benefit isn’t lost forever. After you reach full retirement age, SSA will recalculate your benefit and increase it to account for the benefits that were withheld earlier.

You can estimate your benefits or view your earnings history at the Social Security’s website.

Advantages and Disadvantages

If you work a lower-wage job, collecting Social Security benefits can help supplement your income, even with the deductions. If you can work at your full retirement age, you earn your full retirement benefits plus your salary.

Working and collecting Social Security benefits before full retirement means a reduced payment. In addition, if you earn too much, some of your Social Security benefits may be withheld until you reach age 66 or 67, depending on your birth year.

If you take Social Security payments plus a salary, you may pay higher taxes than if you only pulled an annual salary. Also, if you take Social Security early, you miss out on the chance to boost your benefit even more by waiting until age 70 to draw benefits.

How Many Hours Can You Work on Social Security?

If you are at full retirement age, you can work as much as you want and still receive your Social Security benefits. However, if you are younger than your full retirement age, there is a cap on how much you can earn and receive in Social Security benefits. As of 2024, the Social Security Administration will deduct $1 from your benefits for each $2 you earn above $22,320.

Can You Wait to Claim Social Security Benefits After Full Retirement Age?

If you can wait longer to collect, you’ll avoid any penalties plus your benefit will increase by as much as another 8% for each year you delay, up to age 70.

Can You Collect a Pension While Working Full-Time?

Under most circumstances, you can collect a pension while working full-time, as long as you’re not currently working for the company that issued you the pension.

The Bottom Line

You can begin collecting Social Security benefits while you’re still working, but your benefits will be reduced if you’re younger than your full retirement age. Once you know how much you’ll likely receive from Social Security, you can decide whether earning money outweighs the advantages of waiting to claim benefits later.

Read the original article on Investopedia.