Am I Able to Get Social Security Retirement Benefits if I'm Working?

Claiming while working is possible, but consider it carefully

Illustration of what to know about earning Social Security benefits while working.

Emilie Dunphy / The Balance

In the past, most of the workforce may have had a more clear-cut approach to retirement. You worked long hours for roughly four decades and at around the age of 65, you retired. Of course, there were plenty of people who didn’t follow the traditional path, but today, the dividing lines for retirement are much less clear. The Great Recession of 2008 pushed retirement back for many people.

Some people consider working and collecting Social Security benefits. The question is, can you get Social Security retirement benefits while still actively working? The answer is yes, but consider this choice carefully. Here are a few things to look at first.

Earn Your Credits

The point of Social Security is to have consistent income once you retire, but you first have to pay into the program by earning credits. In 2021, you need to earn $1,470 to receive one credit, or $5,880 for all four credits.

If you were born in 1929 or later, you need 40 credits, or 10 years of earning the minimum amount to receive full retirement benefits. For many people, this may be an easy goal to achieve. 

The amount you must earn to receive one credit adjusts each year.

Before you make a decision on taking benefits while still working, contact Social Security and check your credit balance. If you haven’t yet earned your 40 credits by age 62, consider working a few more years. If you don’t have the required credits, you aren’t eligible for Social Security retirement benefits unless you qualify for other types of benefits.

Learn About the Ages

Social Security offers retirement benefits based on age. Here’s a brief rundown of the ages you should know.

Full retirement age is between 66 and 67, depending on the year you were born. The younger you are, the higher your retirement year. Once you reach full retirement age you can work as much as you would like without it having any impact on your Social Security benefits. 

If you were born after 1959, your full retirement age is 67. 

You can’t receive Social Security retirement benefits until you reach the age of 62, so working and receiving benefits isn’t possible until you reach that age.

The younger you are when you start receiving benefits, the less you will receive. For example, if you start receiving benefits at age 62, your monthly benefit amount is reduced by 30% for the rest of your life. The longer you wait, the more you keep, and if you wait until after full retirement age, your checks are even higher. 

You can delay retirement until you’re 70 years old, which is past your full retirement age. This allows you to earn the highest Social Security benefit possible. 

Consider the Penalties

While the Social Security Administration seeks to keep your contributions as long as possible so the money can be distributed to a larger pool of payees, it does provide information about working while receiving benefits in your retirement years.

If you’re below your full retirement age but are 62 years or older, you can work and receive Social Security benefits at the same time. If you achieved full retirement age in 2021, you could have earned up to $18,240 in 2020 and still received your normal benefit amount without any penalty.

In other words, if you wanted to work and collect benefits, you could have done it as long as you stayed below the $18,240 annual income threshold. The limit applies to the year before you reach normal retirement age.

If your full retirement age is in 2022 or later, you can earn up to $18,960 without a reduction in benefits.

If you earn more than the maximum annual income limit in one year, Social Security will withhold $1 for every $2 you earn above that threshold. For example, let’s say that you are age 63 and earned $35,000 in 2020. Social Security will withhold $8,380 from your benefits check. That equates to a loss of $698 each month on top of the 25% benefit reduction for taking benefits before reaching full retirement age. That’s a big financial hit.

Once you reach full retirement age, things change. If you achieved normal retirement age in 2020, you could have earned up to $48,600 during the months leading up to your birthday before getting penalized. So if you earned that same $35,000, you wouldn’t receive a penalty.

If you earned $55,000, Social Security would withhold $1 for every $3 you earned over the limit. So on your $55,000 earnings, you’d lose $2,693, or $224 per month, leading up to the month you achieve normal retirement age. This penalty is far less severe because you’re so close to full retirement age. If you’re achieving normal retirement age in 2021, the limit is $50,520. This limit applies to the year in which you achieve retirement age.

Anything you earn after reaching normal retirement age is yours to keep and your monthly benefits will not be reduced.

Do You Get the Money Back?

You get repaid your money once you reach full retirement age. At that time, Social Security recalculates your benefit and gives you credit for the months that benefits were withheld. But remember, because you took benefits prior to full retirement age, your check will not be as large as if you had waited.

Tax Implications

Another issue with receiving Social Security benefits while working is the potential tax liability. If you and your spouse are married filing jointly and earn more than $44,000, up to 85% of your Social Security benefit may be taxable. If you and your spouse are married filing jointly and have combined earnings between $32,000 and $44,000, up to 50% of your benefits may be taxable.

If you’re not married, filing single, and earn more than $34,000, up to 85% of your Social Security benefits may be taxable. If you earn between $25,000 and $34,000, up to 50% of your benefits may be taxable.

Over 50% of all people receiving Social Security benefits have to pay taxes on them.

The Bottom Line

Most financial planners agree that waiting to take benefits until you reach full retirement age may be best, if you can afford to do that. If you can’t wait and must take benefits prior to full retirement age, you should consider only working up to the earnings limit for that year to avoid hurting yourself financially.

Although it seems like continuing to work once you’re in your retirement years will produce more income, that may not necessarily be true when Social Security is involved. Because Social Security benefits can be complicated, especially when combined with other financial factors in your life, it may be best to talk to a financial planner about the best way to maximize your benefits.