Editor’s Note: This story originally appeared on NewRetirement.
Public safety and performance: Believe it or not, these two are completely or completely complementary.
You can fully receive Social Security retirement benefits and work at the same time. However, the following are a few things you need to know.
There are no penalties for Social Security work once you reach your full retirement age
There are no penalties for receiving Social Security and working at the same time once you reach your full retirement age.
After reaching your full retirement age, you can earn as much money as you want without incurring any penalties.
The Social Security Administration determines your full retirement age on your birthday. For reference: If you were born on Jan. 2, 1960, or later, 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 paying disability or supplemental insurance.
For more information, you can check the Social Security Administration’s Retirement Benefits Planner webpage.
What are the penalties for Social Security work if I am younger than my full retirement age?
If you decide to start collecting Social Security benefits and work at the same time when you are younger than your full retirement age, there may be penalties, depending on how much you earn.
What happens if you are more than a year under your retirement age?
If you are below full retirement age during the year and still working, the Social Security Administration will deduct $1 from your Social Security benefits check for every $2 you earn above the annual limit.
In 2024, that limit is $22,320.
What happens the year you reach your full retirement age?
In the year you reach your full retirement age, Social Security will only deduct $1 out of every $3 you earn up to a month before you reach full retirement age.
From the month you reach full retirement age, your earnings will no longer reduce your benefits, regardless of your income.
Also, Social Security will recalculate your benefit amount to give you credit for months when benefits are reduced or withheld because of excess earnings.
You will probably pay back any of these work penalties
According to the Social Security Administration’s guidance, “Your benefits will increase during your full retirement to cover benefits withheld from earlier benefits.”
Therefore, you may consider penalties as another way to save for your future.
What counts as an employee’s salary?
If you’re under full retirement age and working, you’re probably worried about what exactly counts as earned income.
The following sources of income are counted as profits:
- Earnings from work
- Total income if you are self-employed
- Bonuses, commissions and holiday pay
- Employer contributions to a pension or retirement plan if the amount of the contribution is included in the employee’s gross income.
Countable income includes pensions, annuities, investment income and capital gains, interest and veterans or other government or military retirement benefits.
Social Security and employment: You will always pay Social Security taxes
Regardless of your full retirement age and whether or not you pay work penalties, if you work, you will continue to pay Social Security taxes on your earnings.
The good news here is that those extra benefits may increase the amount of your Social Security benefit.
The Social Security Administration will check your record every year and will let you know if you have earned the maximum amount of benefits.
When should you start receiving Social Security benefits?
The general rule is that you should delay the start of your Social Security benefits as long as they are valid, whether you intend to work or not.
This is because if you start early, your monthly benefit check will be smaller until you reach full retirement age. Benefit amounts also increase each year after the full retirement age you wait until age 70.
Use NewRetirement Planner – the most comprehensive online planning platform – to help you determine the best time to start benefits.
How long do I have to work?
There are many benefits to working out: staying busy, socializing, stimulating the mind – and, of course, income.
You should work as long as you need and as long as you want.
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