Can You Collect Social Security and Work at the Same Time?

Can You Collect Social Security and Work at the Same Time?

Many people seem to think that working in retirement means giving up their Social Security benefits. However, having a job may very well not affect your benefits.

What matters here is whether you’ve reached your Full Retirement Age. If you’re over your FRA, working won’t affect your monthly Social Security payments at all.

What’s My FRA?

Not sure what your Full Retirement Age is? We can help.

If you were born between 1943 and 1954, then your FRA is 66. For those born between the years 1955 and 1959, the age goes up by two months each year. If you were born in 1960 or after, your FRA is 67.

Here the thing, you can start collecting Social Security benefits prior to reaching your FRA. However, how much you’re paid will be lower – permanently. So, if you can wait, it’s often best to do so.

Potential Financial Penalties

If you start collecting Social Security benefits prior to reaching your FRA, working will affect your income.

If you earn less than $16,920, you won’t be penalized. If, on the other hand, you earn more than that, there are penalties you’ll incur. If you go over that amount, you’ll have to pay $1 for every $2 earned that exceeds it.

So, if you were to earn $20,000, you’d pay $1,540 in penalties. That’s because you’re penalized on the difference between $16,920 and $20,000 at a rate of $1 for every $2.

How Penalties Are Withheld

It’s important to note that the penalties associated with working prior to reaching your FRA don’t come from your paycheck. Rather, they are instead withheld from future Social Security payments.

On the bright side, once you reach your FRA, the penalties will be refunded to you. Unfortunately, it could take ten or more years to become fully reimbursed.

Again, you won’t be penalized if you are over your FRA, which – for most people – is usually somewhere around age 66.

Working in Retirement

Choosing whether to work in your retirement years can be a big decision for both financial and other reasons. If you plan to both work and collect Social Security before reaching your FRA, you’ll need to do some planning.

It’s important to weigh your options and decide if you really need to begin taking Social Security benefits early. If you think you’ll be making enough to be penalized, you may simply want to wait.

Once you reach your FRA, however, you can work as much as you please while still collecting benefits in full.