Are you receiving Social Security retirement benefits and thinking about going back to work?
Many people find themselves in this situation. Perhaps you claimed benefits during a period of unemployment and have now found a great new job. Or maybe your benefits aren't stretching as far as you thought and you need additional income, or retirement has turned out to be boring so you want to rejoin the workforce.
Whatever your reason, it's important to understand that going back to work while receiving Social Security benefits is possible -- but it may affect your monthly benefits. The exact impact of your new paycheck on your Social Security checks depends on two primary factors: How old you are and how much you make.
How your age affects your ability to work and receive benefits
Your age has a major impact on whether working affects your benefit check because once you've reached full retirement age (FRA), you can work as much as you want and earn as much as you want without your benefits being affected.
But if you haven't yet reached FRA, your benefits are going to be reduced if your earnings exceed a certain threshold. The good news is, you get credit for the reduction in benefits -- so you'll get a higher benefit later on.
Full retirement age is the age when you can retire and claim your full Social Security benefits as set by law. Many people erroneously assume FRA is 65, but it's later for anyone born after 1937. FRA gradually increases, as shown in the table below.
If You Were Born In:
Full Retirement Age Is:
66 years, 2 months
66 years, 4 months
66 years, 6 months
66 years, 8 months
66 years, 10 months
1960 or later
How your income affects your ability to work and receive benefits
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Your income also helps determine what happens to your benefits because you can earn a small amount without your Social Security checks being affected. You only start to see a reduction once your income exceeds that threshold.
The amount you can make before you start to lose some of your Social Security income will vary depending on whether you are going to reach FRA in the year you are working or whether you will be below FRA for the entire year. Here are the income limits for 2019.
- If you will not reach FRA in 2019, you can earn up to $1,470 per month or $17,640 per year, and your Social Security checks won't be affected. If you earn more, benefits are reduced by $1 for every $2 in excess income. So, if you earn $30,000 total, your benefits would be reduced by $6,180. You figure this out by subtracting $17,640 from $30,000 to calculate income in excess of the limit and then dividing this number of 2.
- If you will reach FRA in 2019, you can earn up to $46,920 per year or $3,910 per month, and your Social Security check won't change. If your earnings exceed this amount, benefits are reduced by $1 for every $3 in excess income. This reduction applies only to the months before you reach FRA.
The specific earnings thresholds change annually -- but the reduction in benefits is always calculated the same way. So if you exceed the current year's earning limits, you'll lose $1 for every $2 in excess earnings in the years before FRA, and $1 for every $3 in excess earnings before reaching FRA in the year you reach it.
But you aren't losing this money -- you'll get a bigger check later since you get credit for the reduction in benefits. In fact, because you can reduce or even stop your benefits by working and earning a lot, getting a job can be a good option if you claimed your Social Security benefits before FRA and end up regretting it.
Make sure you know how Social Security benefits work
Around half of all married couples, and close to seven in 10 unmarried retirees, rely on Social Security benefits to provide at least half their income. Working during retirement isn't the only thing that can affect these important benefits. The age at which you claim and the number of total working years also matter in determining the size of your checks.
To understand exactly how Social Security works and how your actions impact your retirement income, check out our guides to Social Security. They can help you make informed choices.
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