Many retirees are taking a nontraditional approach to leaving the workforce. In fact, a growing number of seniors are not giving up work for good when they retire, but are instead taking on part-time jobs or even returning to work full time after quitting their careers and claiming their Social Security.
There are some benefits to working after retiring, including the ability to preserve your savings, as well as the ability to continue to enjoy the social connections and mental challenges that working provides. However, if you have claimed Social Security already and are thinking about getting a job, you need to be aware that this decision could have an impact on your monthly benefits.
Here's how working could affect Social Security, so you aren't caught off guard by changes that you could see in your checks.
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If you're working before full retirement age, benefits could be reduced
The key thing to know about working while on Social Security is that if you have reached your full retirement age already, you can work as much as you want to without it affecting your Social Security benefits. Your FRA depends on when you were born. If you were born in 1960 or after, FRA is 67, while for those born earlier, it's between 65 and 67.
If you have not reached FRA and you earn too much money, you will end up seeing your Social Security checks reduced or may even see them disappear entirely. Specifically:
- If you are not going to hit FRA all year, you can earn up to $23,400 in 2025. Once you've hit that threshold, then $1 is deducted from your benefits for every $2 earned above it.
- If you will reach FRA sometime during the year but haven't yet, you can earn up to $62,160 before you begin losing a portion of your benefits. Once you've reached this limit, then you lose $1 for every $3 earned above it.
The Social Security Administration will withhold entire checks based on the reduction in benefits that can result from working. If you were counting on having income from both your job and from Social Security, this can create a major financial burden for you.
The money isn't gone forever -- but it could take time to make up for missed benefits
While losing some of your Social Security checks can be a problem if you were counting on that money, the good news is that you will eventually get back the forgone funds later. It just will happen slowly over time.
When you don't receive Social Security benefits because you work too much, you are credited back for the early filing penalty that was previously applied. Early filing penalties reduce benefits for each month you claim Social Security before your FRA. The penalties equal 5/9 of 1% for the first 36 months you've claimed early and 5/12 of 1% per month for any additional month. So, if you claimed a year early, for example, your benefits would be reduced by 6.7%.
If you ended up claiming benefits and then working, though, and you didn't receive a Social Security check for six months out of the 12 that your early benefits were supposed to come, then you would be credited back six months of early filing penalties. This happens when you do reach FRA and your benefit jumps up accordingly.
Of course, since your monthly payments only increase by a small amount, it takes time for the future checks you're getting to make up for the income you missed out on by working while collecting benefits. But at least you get the money back in the end. Of course, this doesn't help in the short term if your paycheck causes you to lose income you were counting on -- so you need to be aware of these rules before you start working while on Social Security, as you don't want to be left unprepared and facing a huge financial surprise.
