For many people, retirement doesn’t mean leaving a job behind completely. There are numerous benefits to working in retirement, whether on a regular basis or by taking on the occasional gig.
Working can serve as a reason to get out of the house. It can also expand your social network at a time when you may be lonely.
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Plus, the extra money might come in handy. Even if you’ve saved nicely for retirement, you may be worried about depleting your savings too soon, or splurging on something nice you’ve always wanted. A paycheck from a job could give you more leeway.
You should know that you’re allowed to work while collecting Social Security. But there are rules to follow if you’re going to do that. And depending on your age, you could risk whittling down your Social Security checks partially or even completely.
Know the earnings-test limits
Once you reach full retirement age, you can earn any amount of money from a job without the risk of having some of your Social Security payments withheld. But if you file for benefits before reaching full retirement age, two things will happen.
First, you’ll permanently reduce your monthly benefits for life. Secondly, you’ll be subject to an earnings-test limit, and exceeding it will mean having some of your Social Security income withheld.
In 2025, the earnings-test limit is $23,400. From there, you’ll have $1 in Social Security withheld for every $2 you make.
The earnings-test limit is higher, though, if you’ll be reaching full retirement age before the end of the calendar year. In that case, the limit is $62,160. From there, you’ll have $1 in Social Security withheld for every $3 you make.
Now because withheld benefits aren’t forfeited forever, it could make sense to hold down a job that pays beyond the earnings-test limit that applies to you. But you should know that if your paycheck from work is generous, it’s conceivable that your Social Security benefits could be whittled down to $0 (again, not permanently, but on a monthly basis for the time being).
So if you haven’t yet claimed Social Security and you think you’ll continue working to a large degree, you may want to hold off of filing until full retirement age arrives. There’s no sense in locking in a reduced monthly benefit for life if you’re not even going to get most of that money because of working and exceeding the earnings-test limit.
Getting your benefits back
As mentioned, if you earn too much, you risk having some of your Social Security income withheld. But you should know that those withheld benefits will not be paid back to you in a lump sum. Rather, you’ll receive higher monthly benefits starting at full retirement age, which means that withheld money will make its way back to you gradually.
Working can be a positive thing during retirement — there’s no question about it. But if you haven’t yet gotten to full retirement age and you’re signed up for Social Security (or are planning to file shortly), make sure you understand how the earnings-test limits work. And also, make sure that claiming benefits early is really the right choice.
