Many retirees are surprised to learn that they can continue working while receiving retirement benefits. However, understanding how employment affects your benefits is crucial for making informed decisions about your retirement income. Here’s what you need to know about working while receiving retirement benefits.
Age Matters: Full Retirement Age vs. Early Benefits
Full Retirement Age
If you’ve reached your full retirement age (66-67, depending on your birth year), you can work and earn as much as you want while keeping all your Social Security retirement benefits. This gives you maximum flexibility to pursue employment opportunities without worrying about benefit reductions.
Before Full Retirement Age
If you’re younger than full retirement age and continue working, the Social Security Administration (SSA) will temporarily reduce your benefits if your earnings exceed certain thresholds:
- For 2024, if you’re under full retirement age for the entire year, SSA deducts $1 from your benefits for every $2 you earn above $22,320
- In the year you reach full retirement age, SSA deducts $1 for every $3 you earn above $59,520 until the month you reach full retirement age
Important Considerations
Benefit Recalculation
Working while receiving benefits can actually increase your future benefit amount. The SSA:
- Continues to track your earnings
- Automatically recalculates your benefit amount
- Adjusts payments if your additional earnings result in a higher benefit
Tax Implications
Be aware that working while receiving benefits may:
- Make your Social Security benefits taxable
- Push you into a higher tax bracket
- Affect Medicare premiums (if applicable)
Pension and Other Retirement Plans
Different rules may apply if you:
- Receive a government pension
- Have a private pension
- Draw from other retirement accounts (401(k), IRA, etc.)
Strategies to Maximize Benefits
- Consider Delaying Benefits
- If still working, you might benefit from waiting to claim Social Security
- Benefits increase approximately 8% for each year you delay claiming (up to age 70)
- Plan Your Income
- Structure work hours and compensation to stay under earnings limits if needed
- Consider seasonal or part-time work to manage annual earnings
- Track Your Earnings
- Keep accurate records of your income
- Report changes in earnings to Social Security promptly
- Monitor your annual Social Security statement
Special Situations
Self-Employed Individuals
If you’re self-employed, the SSA considers not just your earnings but also:
- Whether you perform substantial services in your business
- The income you actually receive versus what you earn
- Your role in the business operations
Disability Benefits
Different rules apply if you receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI). Consult with a qualified attorney to understand these specific regulations.
Getting Professional Help
Making decisions about working during retirement can be complex. Consider:
- Consulting with a financial advisor
- Speaking with a Social Security representative
- Seeking legal counsel for complicated situations
Working while receiving retirement benefits is not only possible but can be financially advantageous when managed correctly. Understanding the rules and planning accordingly helps you make the most of both your employment income and retirement benefits.
For personalized advice about your specific situation, contact Lemoine Law Firm. Our experienced attorneys can help you navigate the complexities of retirement benefits and employment to ensure you make informed decisions about your financial future.
Attorney, Former Social Security Judge
Prior to entering private practice as a social security disability attorney in 1997, Peter J. Lemoine served as a Social Security Administrative Judge for seven years. His practice is devoted entirely to social security disability law, and he has helped thousands secure social security disability benefits.
