Can you collect Social Security while working?
Yes, you can collect Social Security retirement benefits while continuing to work. The crucial factor is your age relative to your full retirement age (FRA), which is determined by the year you were born. Before your FRA, the Social Security Administration (SSA) applies an earnings test that can temporarily reduce your benefits if you earn above a specific annual limit. After you reach your FRA, there is no limit on how much you can earn without affecting your benefits.
Earnings limits before full retirement age
For those who begin collecting benefits before their FRA, the rules are different depending on whether you are in the year you turn your FRA or a year prior to it. For 2025, the earnings limits are as follows:
- For beneficiaries younger than FRA for the entire year: The annual earnings limit is $23,400. The SSA will deduct $1 from your benefits for every $2 you earn over this limit.
- For beneficiaries reaching FRA in 2025: The annual earnings limit is $62,160. The SSA will deduct $1 from your benefits for every $3 you earn over this limit, but this only applies to earnings in the months leading up to your FRA.
Once you reach your FRA, the earnings limits disappear, and you can earn as much as you want without penalty. It is important to note that only income from wages and self-employment count toward these limits, not investment income, pensions, or other government benefits.
What if you exceed the earnings limit?
If the SSA withholds benefits due to excess earnings, that money is not lost. When you reach your full retirement age, the SSA recalculates your benefit amount to give you credit for the months in which your benefits were reduced or withheld. This results in a higher monthly payment for the rest of your life. Essentially, the withheld benefits are returned to you over time, rather than being forfeited permanently. In some cases, a higher-earning year later in life can also increase your overall benefit calculation, as the SSA factors in your highest 35 years of earnings.
Understanding your full retirement age (FRA)
Your FRA is the age at which you are entitled to your full, unreduced Social Security retirement benefit. It is based on your year of birth, as defined by the SSA. Here's how it's calculated:
- If you were born between 1943 and 1954, your FRA is 66.
- For those born between 1955 and 1959, your FRA increases incrementally by a few months each year.
- If you were born in 1960 or later, your FRA is 67.
Strategies for working and collecting benefits
Navigating the decision to work while drawing Social Security requires careful planning. Here are some strategies to consider:
- Strategic filing: If you need the income but are worried about the earnings test, consider a strategy that maximizes your total lifetime benefits. This could involve claiming early while keeping your income below the annual limit, or delaying benefits to increase your monthly payments.
- The special monthly rule: The SSA offers a special rule for the first year you retire. It allows you to receive a full monthly benefit for any whole month you are considered retired, regardless of how much you earned earlier in the year. This can be particularly useful if you stop working mid-year.
- Higher earning years: Every year you work, your earnings are added to your Social Security record. If your most recent year of earnings is one of your 35 highest-earning years, your benefit amount will be automatically recalculated to reflect the increase, even if you are already collecting benefits.
Working and claiming comparison
| Factor | Claiming Early (Age 62-FRA) | Claiming at Full Retirement Age (FRA) | Claiming Late (Age 70) |
|---|---|---|---|
| Work while collecting? | Yes, but with earnings limits | Yes, with no earnings limits | Yes, with no earnings limits |
| Benefit Reduction? | Yes, reduced amount if you exceed earnings limits. | None, your benefit is not reduced. | None, your benefit is not reduced. |
| Earnings Test | Deductions applied if you earn over the annual limit. | No earnings test is applied. | No earnings test is applied. |
| Benefit Recalculation | Benefit is permanently increased at FRA to account for benefits withheld. | No recalculation due to earnings test. | No recalculation due to earnings test. |
| Monthly Benefit Amount | Reduced for every month you claim early. | Full, unreduced benefit amount. | Includes delayed retirement credits, resulting in a higher monthly payment. |
The importance of financial planning
Deciding when to start your Social Security benefits is a personal choice that depends on your financial needs, health, and family longevity. Combining your Social Security income with earnings from work can provide more financial stability in your later years. However, it is crucial to understand the rules to avoid unexpected benefit reductions and potential overpayments. Consulting a financial advisor can help you make an informed decision that aligns with your long-term retirement goals.
Additional resources
For the most current information and to use official calculators, it is always recommended to consult the Social Security Administration directly. The SSA website offers a wealth of tools and publications to help you plan for your retirement and understand the impact of working while receiving benefits. You can create a personal my Social Security account to get a personalized estimate of your benefits based on your earning history.
Conclusion
Working while receiving Social Security is a viable option for many seniors. You can start drawing benefits as early as age 62, but you must be mindful of the annual earnings limits until you reach your full retirement age. After your FRA, you can earn as much as you like with no penalty to your benefits. While early claiming results in a permanently reduced monthly amount, the ability to work can provide crucial financial flexibility. By understanding the rules and considering your personal circumstances, you can make the best choice for your retirement and healthy aging.
Visit the Social Security Administration website for more resources.
