It's possible to collect Social Security while you are still employed. You can collect both Social Security retirement and survivor benefits, though not at the same time.
While there are some pros if you continue to work, it's also important to be aware of the potential caveats and whether they apply to you. Your benefits could be reduced temporarily depending on your age and how much you earn.
Benefits of Working While Collecting Social Security
Each year, the Social Security Administration (SSA) reviews the earnings of all Social Security recipients. If your income is higher in the years you are working and receiving Social Security benefits, your future benefit amount may increase because it is based on the average income you made during all of your working years. This increase is paid out retroactively to the January after the income was earned.
One other reason to consider taking benefits even if you're still working: They will enable your spouse to start receiving spousal benefits. Factor in whether either of you has reached full retirement age before you decide when and whether to file; calculations from a financial advisor may be useful here. Note that regulations on spousal benefits have changed in recent years so research this carefully.
- You can work and still take Social Security retirement benefits.
- If your income is higher in the years you work and take Social Security benefits, your benefit could increase in the future.
- Depending on your age and income, benefits could be reduced temporarily.
Additionally, if you continue to work while receiving survivor benefits, the additional earnings you make could lead to your own Social Security benefits being higher than your current survivor benefits, which would increase your retirement income. You can keep receiving survivor benefits until age 70, then switch to your own if they are higher.
Be Aware of Income Limits
Depending on your age and how much you earn, it might not be a good idea to receive benefits while you are still working. If you have not reached full retirement age and earn more than the yearly income limit, your benefit amount may be reduced.
Depending on the year you were born, full retirement age is between 65 and 67.
If you are under the full retirement age for the entire year, the SSA deducts $1 for every $2 you earn over the yearly limit. The income limit for 2019 is $17,640.
If you reach full retirement age within the year, the SSA deducts $1 for every $3 you earn over the yearly limit. In this scenario, the income limit is $46,920 for 2019. This only includes income you earned in the months prior to reaching retirement age.
When you reach full retirement age, your earnings no longer negatively impact your Social Security benefits, regardless of how much you earn. When the SSA recalculates your Social Security benefit amount, any months when your benefits were reduced or withheld are not included in the calculations.
In addition, any benefits you lose while working are deferred. Social Security will credit them to your record when you reach full retirement age.
Also keep in mind that if you start taking benefits before or at full retirement age the amount will be less, regardless of whether you continue to work, compared to if you delayed them for a few years. If, for example, your full retirement age is 67 you are eligible to begin receiving benefits as early as age 62. But the amount you receive will be 30% less than if you waited until you turned 67, according to the SSA.
If you continue to work and can manage without supplementing your income with Social Security benefits, waiting until age 70 will increase your benefits even more. Depending on the year you were born, your benefits will increase by 5.5% to 8% annually each year you delay taking them beyond your full retirement age. Once you reach age 70, however, your benefits max out. The good news is that Social Security benefits are adjusted each year for inflation.