Financial planning tools and services to put you on the path to the future you want
Your guide to financial planning and retirement
Connect with peers and experts
Get to know the people behind the company and the mission behind the work
Digital financial planning and guidance at scale
July 7, 2020
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, there are a few things that you do need to know.
There are no penalties for receiving Social Security and working at the same time if you have reached your full retirement age. After 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 website.
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.
If you’re younger than full retirement age during all of 2020, the Social Security Administration will deduct $1 from your Social Security paycheck for every $2 you earn above the annual limit. For 2020, that limit is $18,240.
In the year that you reach your full retirement age, Social Security will only deduct $1 for every $3 you earn above $46,920 until the month you reach full retirement age.
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.
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:
Income that is not counted includes pensions, annuities, investment income, interest, and veterans or other government or military retirement benefits.
No matter your full retirement age and whether or not you are paying work penalties or not, if you are working, you will continue to pay Social Security taxes on your earnings.
The good news here is that your 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.
The general rule of thumb is that you should delay the start of Social Security benefits as long as possible, regardless of whether you intend to work or not.
This is because the earlier you start, the smaller your monthly benefit check will be.
Use the NewRetirement Planner — the best most comprehensive online planning platform — to help you determine the best time for you to start benefits.
This powerful tool can 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.
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.
You may also want to explore more information about best jobs for seniors, benefits of work, and tips for delaying retirement.
Do it yourself retirement planning: easy, comprehensive, reliable
Take financial wellness into your own hands and do it yourself retirement planning: easy,
Share this post:
So, for either financial or personal reasons you think you might want to work after retirement or past the traditional retirement age of 65. Read below to get answers about the best jobs after retirement: Are there many options for work as a retiree? How do you find the right jobs for your goals, income…
Yes. You will likely pay taxes on Social Security. Learn what to expect (federal, state or work) and find a retirement tax calculator! Learn more now…
Mary Beth Franklin is a nationally recognized expert in Social Security claiming strategies, she is also a frequent public speaker. And, she literally wrote the book (Maximizing Your Clients’ Social Security Retirement Benefits) that retirement planning experts use to advise clients on Social Security. She offers you her Social Security expertise with six insider tips…
Our weekly newsletter full of inspiration, podcasts, trends and news.
© 2022 NewRetirement, Inc. All rights reserved.
Disclaimer: The content, calculators, and tools on NewRetirement.com are for informational and educational purposes
only and are not investment advice. They apply financial concepts in a general manner and include
hypotheticals based on information you provide. For retirement planning, you should consider other
assets, income, and investments such as equity in a home or savings accounts in addition to your
retirement savings in an IRA or qualified plan such as a 401(k). Among other things, NewRetirement
provides you with a way to estimate your future retirement income needs and assess the impact of
different scenarios on retirement income. NewRetirement Planner and PlannerPlus are tools that
individuals can use on their own behalf to help think through their future plans, but should not be
acted upon as a complete financial plan. We strongly recommend that you seek the advice of a financial
services professional who has a fiduciary relationship with you before making any type of investment or
significant financial decision. NewRetirement strives to keep its information and tools accurate and up
to date. The information presented is based on objective analysis, but it may not be the same that you
find on a particular financial institution, service provider or specific product's site. All content,
tools, financial products, calculations, estimates, forecasts, comparison shopping products and services
are presented without warranty.