retirement

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.

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.

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 Income from investments, pension benefits and money withdrawn from an IRA or 401(k) are excluded.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 SocialSecurity.gov's How Work Affects Your Benefits. Also see our story Silver Lining for the Social Security Earnings Test.

Most Popular

Is the Stock Market a House of Cards?
investing

Is the Stock Market a House of Cards?

The stock market volatility we’ve been experiencing and the apparent disconnect with the broader economy have some investors wondering just that. But …
October 12, 2020
Stock Market Holidays in 2020
Markets

Stock Market Holidays in 2020

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2020.
October 12, 2020
10 Worst Things to Keep in Your Wallet
Scams

10 Worst Things to Keep in Your Wallet

Storing your passport book or card, a spare key, or any of these other important items in your wallet leaves you open to identity theft -- or worse.
October 9, 2020

Recommended

14 Social Security Tasks You Can Do Online
retirement

14 Social Security Tasks You Can Do Online

Why visit a government office to get your Social Security business done? You can do much of that online.
June 26, 2020
Social Security Recipients, Veterans Must Act Soon to Get Extra $500 Stimulus Check
Coronavirus and Your Money

Social Security Recipients, Veterans Must Act Soon to Get Extra $500 Stimulus Check

The deadline for seniors and veterans to request an additional $500 stimulus check for a dependent child is coming up quickly. See how you can claim y…
October 27, 2020
What Is the Social Security COLA?
retirement

What Is the Social Security COLA?

For the average recipient, the 2021 monthly increase won't even cover a fill-up at the gas station — but it beats nothing.
October 27, 2020
13 States That Tax Social Security Benefits
social security

13 States That Tax Social Security Benefits

You may have dreamed of a tax-free retirement, but if you live in these 13 states, your Social Security benefits are subject to a state tax. That's on…
October 21, 2020