How Working in Retirement Affects Social Security Benefits

A paycheck can temporarily reduce Social Security payments if you're drawing benefits before your full retirement age.

(Image credit: This content is subject to copyright.)

Question: I retired two years ago and started taking Social Security benefits at age 62. I'm 64 now, and I've just been offered a part-time job at my local library. How much can I earn before it lowers my Social Security benefits? Also, is there an age when my earnings stop affecting my benefits?

Answer: Your earnings from a job can only affect your Social Security benefits until you reach full retirement age, which is age 66 for people born from 1943 through 1954.

Because you won't reach your full retirement age this year, you can earn up to $16,920 in 2017 with no impact to your benefits (the cutoff generally increases by a few hundred dollars each year). If you earn more than that, the Social Security Administration will withhold $1 in benefits for every $2 you earn over the limit.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

The cutoff is higher in the year you reach full retirement age. (See this table for the full retirement age by year of birth.) People who turn 66 in 2017, for example, can earn up to $44,880 until the month they reach full retirement age without affecting their Social Security benefits. The Social Security Administration will withhold $1 in benefits for every $3 in earnings above that level. Any money you make in the month you reach your full retirement age doesn't count toward the income test. And after reaching full retirement age, your paycheck won't affect your Social Security benefits at all.

Only wages from a job or self-employment count in this calculation. Income from investments, pension benefits and money withdrawn from an IRA or 401(k) are excluded.

You can use the Social Security Administration's Retirement Earnings Test Calculator to calculate how earnings will affect your benefits.

The money withheld isn't lost forever. Instead, your benefits will be recalculated at your full retirement age and increased to make up for the months when your benefits were withheld. (Your additional work could also help increase your benefits, if it ends up being one of your highest 35 years of earnings. As long as you're working, the Social Security Administration will check your record to see if the extra wages could increase your monthly benefit.)

For more information about the rules and examples, see's How Work Affects Your Benefits. Also see our story Silver Lining for the Social Security Earnings Test.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.