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  • Writer's pictureSteve Coker, CFP

How working impacts Social Security

If you are retired and considering going back to work, even part-time, your Social Security Retirement benefits may be affected. Here are a few rules to keep in mind.

If you have already reached your Social Security Full Retirement Age (“FRA”), work will have no impact on your Social Security Benefits. You can make as much money as you want, and your monthly benefit will remain the same. Of course, Full Retirement Age is defined by the Social Security Administration (not us unfortunately) and is between 66 and 67 years old for those born after 1943. We generally recommend delaying Social Security until Full Retirement Age. Not only does this strategy increase the lifetime benefit in most cases, but it also eliminates any worry about going back to work.

However, if you started your Social Security retirement benefits early, before your Full Retirement Age, and then go back to work, your Social Security benefit will be reduced by $1 for every $2 that you earn above the annual limit ($21,240 for 2023). What counts as earnings? The Social Security Administration counts the wages that you make from your job, including bonuses, commissions, and vacation pay. However, they do not count pensions, annuities, investment income or other retirement benefits. As soon as you reach your FRA, your benefits are no longer reduced no matter how much you earn.

Even this reduction is not something to worry too much about since it is not lost, it is simply deferred until later. Any reduction in your benefit due to working before your Full Retirement Age will increase the monthly benefit you receive once you reach Full Retirement Age.

If you previously elected to receive early Social Security benefits and then change your mind, you may have the option to pay back what you have already received and then restart your benefit later at a higher payout. This option is only available for one year of benefits and is only available for your first year of retirement. If you have already reached your Full Retirement Age, you do not have to pay back your benefits. You can simply suspend your benefit, allowing the monthly benefit to grow until later.

Of course, these rules can get complicated. If you are wondering how work could impact your Social Security benefits, please give us a call and we can help you evaluate your specific situation.


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