There are plenty of good reasons to hold down a job in retirement. First of all, if you're struggling to get by, based on your savings and Social Security benefits alone, working is a great way to boost your income.
Also, working as a retiree has benefits that aren't just financial. For many people, work can serve as a social outlet and a reason to get out of the house. It's also an inexpensive way to occupy your time.
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You are allowed to work while collecting Social Security. And once you reach full retirement age, or FRA, you can earn any amount of income without affecting your Social Security benefits. FRA is 67 for anyone born in 1960 or later.
But many people opt to sign up for Social Security before FRA. Doing so gets them their money sooner, so they're willing to accept a reduced monthly benefit for life in exchange.
If you're working and collecting Social Security before having reached FRA, then you'll want to be mindful of the earning-test limit. That threshold dictates how much income you can earn before you risk having some of your Social Security benefits withheld.
In 2023, the earnings-test limit is $21,240, or $56,520 if you'll be reaching FRA this year. But that limit is rising in 2024, which means seniors who are working and collecting Social Security simultaneously can earn more money without having their benefits impacted.
Introducing the 2024 earnings-test limits
In 2024, you can earn up to $22,320 without having your Social Security benefits withheld. But beyond that point, you'll have $1 in benefits withheld per $2 of earnings.
The limit is much higher if you'll be reaching FRA in 2024. In that case, you can earn up to $59,520 without having benefits impacted. From there, you'll have $1 in Social Security withheld per $3 of earnings.
The good news is that withheld Social Security benefits aren't lost completely. Rather, any sum that's withheld will be paid to you later, once you reach FRA.
But remember, when you claim Social Security ahead of FRA, you'll slash your monthly benefit for life. If you're going to do that, you probably don't want to put yourself in a situation where you're having a large chunk of your benefits withheld.
Keep reading up on Social Security
Although Social Security has been around for a long time, the program tends to change every year. And it's important to keep tabs on them if you're collecting benefits.
Now that you know what the 2024 earnings-test limits look like, you can be strategic in how you earn money. For example, if you currently earn $22,000 a year through part-time work and your hourly rate isn't increasing in 2024, then you may want to avoid taking on more hours. This way, you won't exceed the $22,320 mark.
In some cases, it can make sense to boost your earnings from work, even if it means having some Social Security income withheld. The key, either way, is to be aware of the limits you'll be subject to so that you can plan accordingly.
