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3 Things You Need to Know About Working and Collecting Social Security at the Same Time

By Maurie Backman – Aug 25, 2020 at 6:04AM

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Planning to work and receive benefits? Keep these key points in mind.

Social Security is a complex program with lots of intricate rules. The more you learn about it, the easier it'll be to make the most of your benefits. Social Security has specific rules when it comes to working and collecting benefits at the same time. Here are a few things you should know that might affect your plans.

1. You're allowed to do it

One big misconception about Social Security is that you can only claim benefits once you stop working. Not so. You are allowed to hold down a job and collect benefits at the same time, but whether you get to keep those benefits in full depends on your age and the amount of money you earn from being employed.

When you work and receive benefits simultaneously, you're subject to what's known as the earnings test. If your earnings exceed a certain threshold that changes from year to year, you'll have some of your Social Security benefits withheld.

For 2020, the earnings test limit is $18,240. Make more than that, and you'll have $1 in benefits withheld for every $2 you earn. But there are exceptions, which we'll discuss in our next point.

Older man in a yellow construction hat holding a tablet.

Image source: Getty Images.

2. You can earn as much as you like without impacting your benefits once you reach full retirement age

You're entitled to your full monthly Social Security benefit based on your personal earnings history once you reach full retirement age, which is 66, 67, or somewhere in between, depending on the year you were born.

You can file for Social Security as early as age 62, but in doing so, you'll reduce your monthly benefit on a permanent basis. And if you're working and collecting Social Security before full retirement age, you'll be subject to the earnings test limit of $18,240 this year.

But the earnings test no longer applies once you reach full retirement age, so if you've hit that point, your salary won't impact your Social Security benefits at all. Furthermore, if you'll reach full retirement age this year, you get a higher earnings test limit: $48,600. And if you exceed that limit, you'll have $1 in Social Security withheld for every $3 you earn.

3. Any benefits withheld are not lost permanently

At this point, you may be thinking that working and collecting Social Security simultaneously before full retirement age isn't worth it, since you'll risk losing some of your benefits. But actually, those benefits will merely be withheld -- they won't be forfeited for good.

Each dollar you lose will be paid back to you later in the form of a higher monthly benefit once you reach full retirement age. So if it makes sense for you to hold down a part-time job while collecting Social Security, don't turn that work opportunity down for fear of losing some of your benefits forever.

There are plenty of reasons why you might work and collect Social Security at the same time. If your hours at work are cut, for example, you might need your benefits to make ends meet. And if you're retired and collecting benefits but are growing increasingly restless, you might need a part-time gig for the sake of your mental health. Just be sure to read up on the rules regarding these scenarios so you know what to expect. 

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