Can You Work and Collect Social Security at The Same Time?
Understandably, many people are curious whether they can continue working while also receiving Social Security benefits. The answer is, absolutely, you can! However, it’s crucial to be aware of the specifics of this arrangement to avoid penalties.
Calculating Full Retirement Age
Before diving deeper into this topic, it’s essential to understand how to calculate your full retirement age (FRA). This is the age at which you are eligible to receive your full Social Security benefits.
The FRA is based on the year you were born. If you were born between 1943 and 1954, your FRA is 66. Following that, for each year until 1960, you need to add two months to the FRA. Consequently, anyone born in 1960 or later has an FRA of 67.
Note: The Social Security Administration provides a full retirement age chart that can clarify this information.
Let’s illustrate this with a practical example.
Consider a person born on July 4, 1958. Their FRA is 66 plus eight months. So, they would reach their FRA in March 2025, eight months after their 66th birthday in July 2024.
Impacts of Early and Delayed Social Security Benefits
One can start taking Social Security benefits as early as 62, but doing so will decrease your monthly benefits by about 6.6% per year.
Let’s visualize this using an example:
Assume you’re eligible for $2,000 a month at your FRA, and you take your benefits one year early. This decision would cost you $120 per month in lost Social Security income, translating to a lifetime penalty.
Conversely, delaying Social Security beyond your FRA can increase your benefits by 8% per year up to age 70.
So, waiting four years beyond your FRA would increase your monthly benefit by $640 ($2,000 * 0.32), giving you a total of $2640 per month.
Understanding Work and Social Security: Rules and Guidelines
Now, let’s address the question: can you work while receiving Social Security benefits?
Yes, you can work and receive Social Security. However, if you begin benefits before your Full Retirement Age (FRA), your earnings may affect how much you receive each month under the Social Security earnings test.
In 2025, if you claim benefits before your FRA and continue working, you can earn up to $23,400 for the year before your benefits are reduced. For every $2 you earn above that amount, Social Security withholds $1 from your benefit checks.
In the year you reach your FRA, a higher earnings limit applies before the month you reach that age. For 2025, that limit is $62,160, and Social Security withholds $1 for every $3 you earn above it. Once you reach your full retirement age, the earnings test no longer applies, and you can earn any amount without having your benefits reduced.
The earnings test applies only to wages and self-employment income. It does not count other income like rental income, investment income, pensions, or distributions from traditional retirement accounts.
Working Beyond Full Retirement Age: No More Earnings Test
Once you reach your full retirement age (FRA), you can wave goodbye to the earnings test. It no longer applies, giving you the freedom to earn as much money as you desire without any reduction in your Social Security benefits. This opportunity to work and collect social security applies to retirement benefits, spousal benefits, and survivors’ benefits.
In summary, while working and collecting Social Security simultaneously is possible, it’s essential to account for the rules surrounding the practice. Understanding these rules can help you avoid penalties and maximize your retirement benefits.
Recommended reading: Rules for Working and Social Security Benefits article on Social Security Administration website.