In 2024, the average monthly Social Security retirement benefit is an estimated $1,907. While that regular monthly income helps retirees, it's usually not enough to cover living expenses. That's one reason why some people choose to work after retirement age.
Whether you choose to keep working for financial reasons or because you enjoy your job, you can collect Social Security benefits while earning income. But if you make more than a certain amount and haven't reached your full retirement age, your benefits will temporarily be smaller. Don't worry, though: they won't be lost forever. After you reach your full retirement age, the Social Security Administration (SSA) will recalculate your monthly benefits.
Here's a rundown of how earned income can reduce your Social Security benefits.
Key Takeaways
- You can get Social Security and work at the same time, but your monthly benefit may be temporarily reduced, depending on your income.
- If you have reached your full retirement age, you can receive your entire benefit, no matter how much you earn.
- If you haven't reached your full retirement age, Social Security will deduct $1 from your benefits for every $2 or $3 you earn above a certain amount.
- After you reach your full retirement age, Social Security will increase your benefits to account for the money it withheld earlier.
How Social Security Benefits Work
For some, qualifying for Social Security isn't that difficult. Over the course of your working life, you need 40 credits to be eligible for retirement benefits, which is equal to 10 years of work, as defined by the SSA. In 2024, you get one credit for every $1,730 of earnings, up to a maximum of four credits per year.
Social Security calculates your benefit amount based on your earnings over the years, whether you were self-employed or worked for an employer. The more money you earned, the more you paid into Social Security—and the higher your future benefits—up to certain limits. The math is much more complicated than this sounds, but that's basically how it works.
The Current State of Retirement
Social Security benefits are a major source of retirement income for many retirees. Among retired people aged 65 or older, 37% of men and 42% of women rely on Social Security for at least half their income, according to the Social Security Administration.
Federal Reserve data shows that 80% of retirees also have other sources of income including pensions, defined-benefit plans such as 401(k)s, and investments. A growing share of older Americans are continuing to work as well: 19% of U.S. adults aged 65 or older held a job in 2023, compared with 11% in 1987.
"Peak 65"
A record-setting 4.1 million Americans will turn 65 each year between 2024 and 2027. However, the average retirement age is 61, meaning that many retirees will draw on Social Security benefits long before their full retirement age.
The Future of Social Security
Social Security benefits may not be enough to cover expenses, but many retirees would find it difficult to survive financially without them. Future retirees are concerned about the program's health: a 2023 Gallup poll showed that only half of nonretired workers expect to receive Social Security payments one day.
Currently, Social Security data shows that the Old-Ageand Survivors Insurance (OASI) Trust Fund will be able to pay full benefits through 2033. At that point, OASI will be able to pay 79% of benefits.
However, Congress could take steps to shore up Social Security and ensure full payments beyond 2033. Possible fixes include increasing payroll tax rates, raising the retirement age, and eliminating the cap on taxable income.
Working While Receiving Social Security Benefits
If you work, the money you bring home can affect your Social Security benefits—but the specifics depend on your age and how much you earn. Remember that although your full retirement age might be 67, you can start receiving benefits at 62, even if you're still working.
But for the 2024 tax year, if you start receiving benefits before your full retirement age, you can only earn up to $22,320 ($1,860 per month) and still get your full benefits. Once you earn more than that limit, the SSA deducts $1 from your benefits for every $2 you earn.
In the year you reach your full retirement age, though, these numbers change. If you earn more than $59,520 ($4,960 per month) for the 2024 tax year, the SSA deducts $1 for every $3 you earn—but only during the months before you reach your full retirement age.
Once you reach your full retirement age, you can earn any amount of money, and the SSA won't reduce your benefits.
Important
There's no advantage to waiting past age 70 to start collecting benefits.
"The biggest thing to remember if you are working is to notify the Social Security Administration if you're going to earn wages in excess of the earnings threshold," said Matt Ahrens, a partner and chief investment officer at MarksNelson.
Otherwise, he notes, "They will not be notified of your earnings until you file your taxes the following year. And if you were receiving excess benefits, you can be fined, forced to pay back the excess, or receive lower future benefits."
Example of Working While Receiving Social Security
Consider a 62-year-old single taxpayer who receives a monthly Social Security retirement benefit. They began working part-time for a local business, where they earn $25,000 per year.
Because their 2024 income exceeds the earnings threshold by $2,680 ($25,000-$22,320), the SSA will reduce their benefits by $1,340 ($1 for every $2 earned or $2,680/$2).
71 million
The number of people expected to collect some type of Social Security benefit in 2024.
Working Outside of the United States
If you retire and work outside the United States, the rules are different. If you are younger than full retirement age, Social Security will withhold your benefits for every month you work more than 45 hours for an employer (or as a self-employed worker) in a job that's not subject to U.S. Social Security taxes. That applies regardless of how much money you earn. These rules can get complicated, so you'll want to contact Social Security for advice on your particular situation.
Frequently Asked Questions (FAQs)
What Is Full Retirement Age?
Your full retirement age (which is also known as normal retirement age) is the age at which you become eligible to receive full benefits from the SSA. It is 66 years old for those born between 1943 and 1954 and gradually increases to 67 years old for those born on January 2, 1960, and after.
If, for example, your full retirement age is 67, you can start taking benefits as early as age 62, but your benefit will permanently be 30% less than if you waited until age 67.
If you can manage without receiving your Social Security benefits at full retirement age, wait until age 70. That will give you the maximum benefit each month.
Can You Collect Social Security at 62 and Still Work?
You can collect Social Security retirement benefits at age 62 and still work. If you earn over a certain amount, however, your benefits will be temporarily reduced until you reach full retirement age.
How Much Can I Earn and Still Collect Social Security?
If you start collecting benefits before reaching full retirement age, you can earn a maximum of $22,320 in 2024 and still get your full benefits. Once you earn more, the SSA will deduct $1 from your benefits for every $2 earned.
The Bottom Line
If you paid into Social Security long enough to earn 40 credits and have reached your full retirement age, you can make as much money as you like without reducing your Social Security benefits. If you start collecting benefits earlier and earn over a certain amount, a portion of your benefits will be withheld. However, once you reach your full retirement age, the SSA will recalculate your benefit to make up for the money it withheld earlier.
