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3 Things to Know if You Claim Social Security While You're Still Working

By Maurie Backman - Apr 21, 2021 at 6:36AM

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Working while collecting benefits? Keep these key points in mind.

Some people wait until they retire fully to begin collecting Social Security. But you may want to claim benefits while you're still working in some capacity. The good news is that you're allowed to do that. But there are some rules you should be aware of if you're going to work and receive benefits at the same time.

1. If you've reached full retirement age, there's no impact

You may know that you're entitled to your full monthly Social Security benefit, based on your personal earnings history, once you reach full retirement age, or FRA. That age is either 66, 67, or somewhere in between -- it depends on when you were born. You're allowed to sign up for Social Security as early as age 62, but if you claim your benefits before FRA, you'll reduce them permanently in the process.

But once you reach FRA, you can hold down a job and earn any amount of money from it, and your benefits won't be impacted at all. This means that if you want to claim Social Security at FRA, you don't have to quit your job if you don't want to -- there's no negative financial impact.

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2. If you haven't reached full retirement age, you'll risk having some benefits withheld

If you file for benefits before FRA, you may have to forfeit some of your Social Security income temporarily if your work-related earnings are too high. Each year, a limit is set that exempts benefits from being impacted. In 2021, you can earn up to $18,960 and not lose any benefits, but from there, you'll have $1 in Social Security withheld for every $2 you earn. Again, this applies only if you have not yet reached FRA.

Now that limit is a lot higher if you'll be reaching FRA this year -- it sits at $50,520. From there, you'll have $1 in Social Security withheld for every $3 you earn. But remember, in addition to having benefits withheld, you'll also slash your monthly benefit by filing early.

3. Benefits that are withheld won't be lost forever

While working and collecting Social Security simultaneously may result in having some benefits withheld, you won't have to forfeit that money permanently. Rather, once you reach FRA, the money that was withheld will be returned to you via a higher monthly benefit, so it's not completely lost. However, if you file for benefits before FRA, that lower monthly benefit will get locked in, so keep that in mind if you're able to continue working in the years leading up to FRA. You may decide you're better off waiting to file as long as you have a decent paycheck to collect. Or, you may decide to live off a combination of a part-time paycheck and your savings to avoid locking in a lower monthly Social Security benefit.

Some of Social Security's rules are fairly flexible, as evidenced by the fact that you're not barred from working and collecting benefits at the same time. Just be aware of the consequences of going this route before you sign up for benefits, or before you apply for a job once you're already collecting benefits.

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