can you work and collect social security

Can You Work and Still Collect Social Security: A Helpful Guide

The best time to collect Social Security benefits is always an ongoing topic among near-retirees. This leads us to the question: can I collect Social Security and still work?

The answer is not as straightforward as you may think. But there are articles, like this one, that will guide you. Read on to see the essentials you need.


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How Does Social Security Work?

First off, let’s better understand Social Security. Your lifetime earnings determine your Social Security retirement benefit. Consequently, your benefits will increase as your wages do. The catch is if your taxable income exceeds $147,000, Social Security will not tax it. The “maximum taxable earnings” is the annual variation in this amount.

You can get four credits per year by making at least $6,040 in payroll taxes paid to Social Security. To be eligible for benefits, you must accrue at least 40 credits during ten years. Benefits are calculated using the 35 years when you earned the highest income. Your payout will be reduced if you haven’t worked for 35 years because zeros will be added for those years. Social Security averages your monthly income.

Know Your Social Security Full Retirement Age

Knowing your full retirement age helps identify how employment during retirement will impact your Social Security benefits. Your birth year determines your complete retirement age. For those born between 1943 and 1954, the full retirement age is 66 years old. For individuals who were born in 1955 through 1959, the number rises by a few months. The full retirement age for anyone born in 1960 or after is 67. 

Can You Work and Still Collect Social Security?

If you ask, “Can I work and collect social security?” here’s your answer. Yes! You can still work and collect your Social Security simultaneously. The catch is that if you work before your full retirement age, the dollar amount of your monthly Social Security check is sometimes temporarily reduced if you earn more than the yearly limit set by the Social Security Administration (SSA).

You Won’t Lose Your Benefits: They Are Just Deferred

You will not lose your benefits; they are merely deferred and will be credited by modifying your monthly benefit amount starting when you reach full retirement age. So, if you’re thinking, “Can I work and collect social security,” rest assured that you still can.

For example, if you claim Social Security at age 62, and the SSA deducts $5,000 since you made $31,240 ($10,000 more than the maximum amount allowed), 4.17 months of benefits are lost if your monthly benefit is $1,200. 

When you reach full retirement age, the Social Security Administration will boost your benefit by rounding up to five months (they do not process fractional payments). 

Types of Income Included in Earnings Limits

  • For the employees: If you work for someone else, your wages count towards Social Security earnings limits as soon as you earn them rather than when they are paid out. Your contributions to a retirement plan or a pension are also counted when the amount is included in your gross wages. For instance, if you earn pay for accumulated sick or vacation days or are awarded bonuses in 2023 that are paid out in 2024, these will count against your 2023 earnings limit. 
  • For the self-employed: If you’re self-employed, only net earnings are included against the limits and generally counted when you receive the income—rather than when you earn it. Income from investments, capital gains, interest, pensions, government benefits, and annuities aren’t included in your earnings calculation.

The Social Security Earnings Limit Will Change the Year You Reach Full Retirement Age

Suppose your full retirement age is in 2023, and you currently receive $2,500 monthly from Social Security while earning an additional $5,000 each month from employment. In this case, a portion of your Social Security benefits will be temporarily withheld as your income exceeds the established threshold by $290. Anticipate a reduction of approximately $97 per month, as $1 is withheld for every $3 earned beyond the limit until you attain full retirement age.

The Special Earnings Limit Rule

Under a special rule set by the Social Security Administration—which applies for one year, typically during the first year of retirement—you can receive a full Social Security check for the whole month you’re retired, regardless of yearly earnings. This rule was set not to penalize people who retire mid-year or later in the year and have already earned more than the earnings limit before retirement. You must meet a few qualifications to take advantage of this rule.

You must be considered as “retired”

First, Social Security must consider you “retired,” meaning you’ve passed their monthly earnings test by performing limited or no paid work. Your monthly retirement earnings must be $1,770 or less if you haven’t yet reached your full retirement age. You also cannot perform substantial services in self-employment, meaning devoting more than 45 hours per month to your business or 15 to 45 hours per month to a business in a highly skilled occupation. 

Other factors to the rule

For example, let’s assume you plan to retire at age 62 and collect Social Security in November 2023. In this case, you’ll earn about $50,000 significantly higher than the earnings limit from January through October of that same year. Provided your monthly income is $1,770 or below for the remainder of 2023, you’re entitled to enjoy full Social Security benefits in November and December. The special rule also applies to those who retire and reach full retirement age in the same year. 

The Bottom Line

Understanding how your earnings affect your benefits is crucial if you intend to work and receive Social Security benefits before reaching your full retirement age. We hope the notes on this article answered your main query: “Can I still work and collect Social Security?” Remember that effective planning, ideally with the guidance of a financial advisor, is essential to optimize your Social Security benefits according to your unique circumstances. However, the bottom line is yes, you can work and collect Social Security with some caveats.

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Tammy Danan
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Tammy is a journalist and creative content writer with over 10 years of experience. Driven by curiosity, her work explores how digital marketing, SaaS, and varied creative pursuits intersect with everyday life.She focuses on creative storytelling and tackles how the search for a more meaningful life is changing the way we work.Tammy will meow at all stray cats, and won't start the day without an iced Spanish latte.

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