Social Security and Working: Everything You Need to Know

Older worker man examining his notes
Liderina / Shutterstock.com

This story originally appeared on NewRetirement.

Social Security and working: Believe it or not, the two are more or less completely compatible with each other.

You can absolutely get Social Security retirement benefits and work at the same time. However, following are a few things that you do need to know.

Social Security work penalties are determined by your age

Senior working in an office
stockfour / Shutterstock.com

There are no penalties for receiving Social Security and working at the same time if you have reached your full retirement age.

After reaching your full retirement age, you can earn as much money as you like without incurring any penalties.

Your full retirement age is determined by your birthday. For reference: If you were born between 1943 and 1954, then your full retirement age is 66. If you were born in 1960 or after, then your full retirement age is 67.

It is important to note that the rules described here are for Social Security retirement benefits. There are different rules for disability or supplemental security income payments.

For more information, you can consult the Social Security Administration’s Retirement Benefits Planner webpage.

What are the Social Security work penalties if I am younger than my full retirement age?

Man looking at inflation
Karpova / Shutterstock.com

If you decide to collect Social Security benefits and work at the same time when you are younger than your full retirement age, there will be penalties dependent on your age.

What happens if you’re more than a year under your full retirement age?

Older worker
dotshock / Shutterstock.com

If you’re younger than full retirement age during all of 2020 and still working, the Social Security Administration will deduct $1 from your Social Security benefits check for every $2 you earn above the annual limit.

For 2020, that limit is $18,240.

What happens the year you reach your full retirement age?

Man working from home
Monkey Business Images / Shutterstock.com

In the year that you reach your full retirement age and still are working, Social Security will only deduct $1 from your benefits for every $3 you earn above $46,920 until the month you reach that full retirement age.

You will likely recoup any work penalties

Social Security payment
Alexey Rotanov / Shutterstock.com

According to the Social Security Administration’s guidance, “Your benefit will increase at your full retirement age to account for benefits withheld due to earlier earnings.”

So, you can kind of think of the penalties as another way to save for your future.

What counts as work earnings?

Senior woman looking in the mirror
goodluz / Shutterstock.com

If you are under your full retirement age and working, you are probably concerned about what exactly counts as work earnings.

The following income sources count as earnings:

  • Wages from a job
  • Net earnings if you are self-employed
  • Bonuses, commissions and vacation pay

Income that is not counted includes pensions, annuities, investment income, interest and veterans or other government or military retirement benefits.

Social Security and working: You will always pay Social Security taxes

Seniors working on taxes
Dragon Images / Shutterstock.com

No matter your full retirement age and whether or not you are paying work penalties, if you are working, you will continue to pay Social Security taxes on your earnings.

The good news here is that those additional earnings could potentially increase your Social Security benefit amount.

Social Security will check your record every year and will notify you if you have achieved a higher benefit amount.

When should you start receiving Social Security benefits?

Social Security payments
Steve Heap / Shutterstock.com

The general rule of thumb is that you should delay the start of Social Security benefits as long as practical, regardless of whether you intend to work or not.

This is because the earlier you start, the smaller your monthly benefit check will be. You can use a Social Security break-even calculator to determine the optimal time to start benefits.

Or, find out your different benefit amounts for different start ages and try various scenarios in a detailed retirement calculator.

The NewRetirement retirement planning calculator will tell you exactly how your cash flow, net worth, out-of-savings age and debt situation will be impacted by different Social Security benefit amounts and start ages, factoring in penalties for any work income received before full retirement age.

How long should I work?

Senior worker
gpointstudio / Shutterstock.com

There are so many benefits to work: staying engaged, social connection, mental stimulation — and, of course, income.

You should work as long as you need to and as long as you want to.

A retirement planning calculator can be a helpful tool to help you assess how work income impacts your long-term retirement plan.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
5 Common Medical Expenses That Medicare Won’t Pay For
5 Common Medical Expenses That Medicare Won’t Pay For

Don’t let these health care costs catch you off guard in retirement.

9 Things You Should Never Pay For With a Debit Card
9 Things You Should Never Pay For With a Debit Card

Use your debit card for one of these expenses, and you could risk your bank account balance, your credit score or even identity fraud.

The 13 Worst Types of Tickets for Your Car Insurance Rate
The 13 Worst Types of Tickets for Your Car Insurance Rate

Some types of traffic violations can drive your car insurance rate dramatically higher.

How to Avoid Being Surprised by 7 Nasty Expenses
How to Avoid Being Surprised by 7 Nasty Expenses

Major expenses are difficult to predict, but there are ways to make sure you’re protected.

It’s Worth Paying More for These 7 Things
It’s Worth Paying More for These 7 Things

Sometimes, the difference in quality makes it worthwhile to open your wallet a little wider.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

20 Things That Are Actually Worth Stockpiling
20 Things That Are Actually Worth Stockpiling

You don’t need a year’s supply of toilet paper to survive an outbreak, but consider stocking up on these items.

Can a Twice-Divorced Woman Claim Social Security Survivors Benefits?
Can a Twice-Divorced Woman Claim Social Security Survivors Benefits?

Understanding survivors benefits rules is the key to getting the most from your benefit.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

These Are the 10 Worst Cars for Depreciation
These Are the 10 Worst Cars for Depreciation

Two types of vehicles are especially likely to see steep plunges in value.

Never Buy These 10 Things With Your Credit Card
Never Buy These 10 Things With Your Credit Card

Credit cards offer many conveniences and protections, but sometimes it’s simply smarter to keep the plastic tucked away.

13 Amazon Purchases That We Are Loving Right Now
13 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

10 Things I Always Buy at Trader Joe’s
10 Things I Always Buy at Trader Joe’s

From snacks to sweets to side dishes, stock your cart with these time-tested favorites on your next TJ’s run.

8 Surprising Household Items You Can Sell for Fast Cash
8 Surprising Household Items You Can Sell for Fast Cash

Sometimes, the humblest household items are worth the most money.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

There are easy high-paying majors available in the U.S. — and no bachelor’s degree is required. We’re here to help you find easy degrees that pay well.

Cut These 11 Expenses Now If You Hope to Retire Early
Cut These 11 Expenses Now If You Hope to Retire Early

Like the idea of financial independence? Part of the FIRE equation is cutting costs.

5 Ways Social Security Will Change in 2021
5 Ways Social Security Will Change in 2021

These adjustments will affect both workers and retirees in the new year.

Stop Buying These 19 Things Online
Stop Buying These 19 Things Online

The internet has changed how we shop. But for some things, you’re still better off buying the old-fashioned way.

15 Products You Need — Even If You Didn’t Know It
15 Products You Need — Even If You Didn’t Know It

Discover some must-have products on Amazon that you didn’t even know you were missing.

7 Tips for Building an Emergency Food Supply
7 Tips for Building an Emergency Food Supply

A pandemic or natural disaster could leave you reliant on your existing emergency food supply. Is your pantry well-prepared for emergencies? Knowing what to stock up on for emergencies can be a difficult task and we’re here to help.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

8 Things You Should Buy at Restaurant Supply Stores
8 Things You Should Buy at Restaurant Supply Stores

You don’t have to be a chef or a restaurant owner to shop here.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.