Can I Work While Being on Social Security?

July 27, 2021 Topic: Social Security Blog Brand: Politics Tags: Social SecurityRetirementLaborBenefitsWorkers

Can I Work While Being on Social Security?

The answer is yes, but there are some caveats. 


For those individuals who are ready to collect Social Security benefits but want to keep working, there is indeed good news: both can be done simultaneously.

However, according to Merrill, an investment management and wealth management division of Bank of America, “if you’re working and collecting benefits before you’ve reached full retirement age—which is between ages sixty-six and sixty-seven, depending on the year of your birth—your monthly benefits may be subject to a reduction if your income exceeds a prescribed limit.”


Not ‘Fully Retired’

Do keep in mind that the Social Security Administration (SSA) doesn’t consider people “fully retired” if they earn more than a certain amount from work—hence the amount of benefits taking a hit, says AARP, a United States-based interest group focusing on issues affecting those over the age of fifty.

The organization added that “earnings caps are adjusted annually for national wage trends, and they differ in the years before and during you will reach FRA (full retirement age).”

In one example, let’s say an individual is receiving Social Security benefits and working in 2021, but he or she won’t reach full retirement age until later in the year.

“The earnings limit is $18,960,” AARP writes. “You lose $1 in benefits for every $2 earned over the cap. So, if you have a part-time job that pays $25,000 a year—$6,040 over the limit—Social Security will deduct $3,020 in benefits.”

However, for an individual reaching full retirement age later this year, “the earnings limit is $50,250, with $1 in benefits withheld for every $3 earned over the limit. That applies until the date you hit FRA: past that, there is no benefit reduction, no matter how much you earn.”

Type of Earnings Matters

Merrill added that the amount by which your Social Security benefit is reduced depends on the type of work earnings.

“If you’re self-employed, the government counts only your net earnings from that work. If you work for an employer, only your wages are included in Social Security calculations. Pensions, annuities, investment income and other government benefits do not count as earnings while you work in retirement,” the company says.

In addition, working while receiving Social Security benefits could potentially affect taxable income.

“Taxes on Social Security retirement benefits are based on what is commonly referred to as your combined income, a figure the IRS calculates by adding up your adjusted gross income, any tax-free interest you may have earned, and fifty percent of your Social Security benefits, plus certain other adjustments for the year,” Merrill writes.  

“There are strategies that can help you minimize taxes on your Social Security benefits, although, these too can change based on your age.”

Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters