If You Start Collecting Social Security and Continue to Work Do You Have to Continue to Pay Into It
Working While on Social Security
You can receive Social Security retirement benefits and work at the same time, but your monthly benefits may be temporarily reduced. If you've reached full retirement age, you can increase your Social Security benefits with each additional year you work.
- Written by
Rachel Christian
Rachel Christian
Financial Writer and Certified Educator in Personal Finance
Rachel Christian is a writer and researcher for RetireGuide. She covers annuities, Medicare, life insurance and other important retirement topics. Rachel is a member of the Association for Financial Counseling & Planning Education.
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- Edited By
Lee Williams
Lee Williams
Senior Financial Editor
Lee Williams is a professional writer, editor and content strategist with 10 years of professional experience working for global and nationally recognized brands. He has contributed to Forbes, The Huffington Post, SUCCESS Magazine, AskMen.com, Electric Literature and The Wall Street Journal. His career also includes ghostwriting for Fortune 500 CEOs and published authors.
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- Reviewed By
Ebony J. Howard, CPA
Ebony J. Howard, CPA
Credentialed Tax Expert at Intuit
Ebony J. Howard is a certified public accountant and freelance consultant with a background in accounting, personal finance, and income tax planning and preparation. She specializes in analyzing financial information in the health care, banking and real estate sectors.
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- Published: January 4, 2021
- Updated: June 13, 2022
- 5 min read time
- This page features 7 Cited Research Articles
Key Takeaways
- You can earn more money without jeopardizing your benefits by waiting to reach the full retirement age before starting to collect Social Security.
- Your Social Security benefits can temporarily be decreased if you earn above a certain amount.
- You won't pay taxes on your Social Security benefits if they are your only income.
What Is Full Retirement Age?
You can collect Social Security benefits and work at the same time, but your benefits may be reduced if you haven't reached your full retirement age yet.
Once you hit full retirement age, there is no limit on how much you can earn while working on Social Security. Plus, it increases your future benefits for when you to choose to receive them.
Your full retirement age depends on the year you were born.
Social Security Full Retirement Ages by Year
| Birth Year | Full Retirement Age |
|---|---|
| 1943-1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
You may opt to start receiving your Social Security retirement benefits before full retirement age. The soonest you can claim benefits is at age 62.
How Much Can You Earn While Receiving Social Security?
If you start collecting Social Security prior to full retirement age, you can earn up to $19,560 in 2022 and still receive your full benefits.
After you hit that threshold, Social Security deducts $1 from your benefits for every $2 you earn.
Did You Know?
The Social Security Administration estimates that as of January 2022, the average monthly retirement benefit will be $1,657.
In the year you reach full retirement age, you can earn more money without jeopardizing your benefits.
In 2022, you can earn $51,960 a year. After that, Social Security deducts $1 for every $3 you earn — but only during the months before you reach full retirement age.
For example, if your full retirement age is 67 and your birthday is in September, you can earn $51,960 from January through August. But starting in September, you can earn as much as you want.
In fact, once you hit your full retirement age, you can actually increase your future Social Security benefits if you choose to continue working. So, each additional year you work after you reach your full retirement age is another year added to your benefits. Higher lifetime earnings lead to higher benefits when you decide to receive them.
If you earn more while working than the income limits mentioned above, it's important to notify Social Security.
Otherwise, the Social Security Administration will learn about your excessive earnings when you file taxes the following year. If this happens, you may be fined, forced to pay back the difference or receive reduced future benefits.
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Social Security Payments Are Withheld Temporarily
Social Security can dock your benefits if you earn above a certain amount, but you may recoup some of these losses.
If your retirement benefits were withheld due to excessive earnings, your monthly Social Security check will increase to account for the months your benefits were withheld once you reach full retirement age.
However, these benefits won't return to you in a simple lump sum. The way Social Security recalculates your benefits is complicated.
Did You Know?
When calculating your yearly income, Social Security does not include pensions, annuities, investment income, interest, veterans or other government or military retirement benefits.
Here's an example.
Let's assume you were born in March 1959. Your full retirement age is 66 and 10 months, but you start claiming benefits when you're first eligible at age 62.
The difference between when you started collecting benefits and your full retirement age is 58 months.
Claiming benefits early reduces your check by 29.17 percent.
Your monthly benefit is $708 and you earn $25,000 a year through a part-time job. Social Security will withhold $3,020, or the equivalent of roughly 4.2 months of benefits lost.
Let's assume you end up losing the equivalent of 10 months of benefits by the time you hit full retirement age.
Once you reach full retirement age, Social Security will reset your benefits as if you'd retired 48 months early rather than 58 months early.
This helps boost your Social Security check for 10 months, or the number of months you went without benefits.
Another important thing to keep in mind is that your Social Security benefits are based on your highest 35 years of earnings.
If your latest year of earnings ends up being one of your highest, the Social Security Administration will refigure your benefit and pay you any increase due.
For more information about working and Social Security benefits, check out the SSA's How Work Affects Your Benefits booklet.
Social Security Benefits and Income Taxes
If Social Security is your only income, you likely won't pay taxes on your benefits.
But things can get more complex if you return to work and start earning money.
To determine how much of your check is taxable, the Social Security Administration uses a term called "combined income."
Combined income is the combination of your adjusted gross income, nontaxable interest and half of your Social Security benefit.
If you file as single and your combined income is below $25,000, your Social Security benefits will not be taxed.
If your combined income is between $25,000 and $34,000 for a single filer, up to 50 percent of your benefits are taxable.
If your combined income is more than $34,000, up to 85 percent of your benefits are subject to federal income tax.
Regardless of your income level, no more than 85 percent of your Social Security benefits can be taxed.
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Source: https://www.retireguide.com/retirement-planning/social-security/working-after-enrollment/