Understanding Social Security Rules for Those Who Want to Keep Working?

Many people think Social Security benefits are only for retirement, but you can work while receiving them.

However, it’s important to understand how working affects your benefits, especially if you start collecting them before your full retirement age.

If you were born on or after January 2, 1960, your full retirement age is 67. You can begin collecting as early as 62, but working before retirement may result in some of your benefits being withheld.

This doesn’t mean the money is lost – it’s just temporarily withheld. Let’s look at how this works and how your benefits can change over time.

What Happens When You Work and Collect Benefits?

If you decide to work while receiving Social Security benefits before reaching full retirement age, your payments will be reduced.

In 2025, for every $2 you earn above $23,400, the Social Security Administration (SSA) will withhold $1 from your benefits.

If you reach full retirement age in 2025, the SSA will withhold $1 for every $3 earned above $62,160.

However, they only consider your earnings up to the month before you reach full retirement age. Once you reach full retirement age, you can work as much as you want without any reduction in your benefits.

Benefits Increase After Full Retirement Age

One of the advantages of working while receiving benefits before full retirement age is that your monthly payment can increase later on.

When you reach full retirement age, the SSA recalculates your benefit amount, giving you credit for the months your benefits were withheld. This adjustment can lead to higher monthly payments going forward.

How Earnings Affect Your Social Security Payments?

The SSA calculates your monthly benefit amount based on your highest-earning 35 years of work.

If you continue working while receiving benefits and earn more in a year than in one of your previously calculated highest-earning years, the SSA will update your records.

The lower-earning year will be replaced with your higher-earning year, which could result in a larger monthly benefit amount. It’s important to report any changes in your annual earnings to the SSA to ensure your benefit amount is accurate.

Social Security COLA Increase

Another way your benefit amount can increase is through the annual Social Security cost-of-living adjustment (COLA).

This is a small increase meant to keep up with inflation. Even if you continue to work, you’ll still receive this yearly adjustment.

Read More:

• Average Social Security Benefit for Age 72 Revealed: What to Expect in Retirement?
• Don’t Lose Your Social Security Benefits: What Happens If You Don’t Pay Off Debts?

Applying for Social Security Retirement Benefits

If you’re ready to apply for retirement benefits, start by creating a My Social Security account online. From there, you can access the “apply for benefits” page and follow the instructions.

Make sure to review your earnings record and understand the impact of working while receiving benefits to make the best decision for your financial situation.

Final Thoughts

Working while receiving Social Security benefits is possible, but it’s essential to understand the rules to avoid surprises.

Knowing how your earnings affect your benefits and how to maximize your payments can help you make the most of your retirement income.

Whether you choose to work for personal fulfillment, financial reasons, or both, understanding the impact on your Social Security benefits will help you plan better for your future.

Reference

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