If you are collecting Social Security benefits and thinking about continuing to work, you need to be aware that the rules for holding a job while collecting benefits can be more complicated than you'd think.
If you are over full retirement age, you can work as much as you want without decreasing your benefit. If you are under full retirement age, though, and you earn too much, you can temporarily reduce the money Social Security pays to you and even find whole checks disappearing. But these reductions are temporary and not necessarily a bad thing in every situation.
More importantly, no matter your age, doing work while collecting benefits could actually increase your checks for a surprising reason that many people overlook.
Although this all sounds confusing, let's break it down to understand exactly how working is going to impact your checks so you can make informed choices about holding down a job with Social Security income.
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Working before reaching full retirement age
First things first, let's address the impact of working before reaching full retirement age (FRA). FRA is 67 for anyone born in 1960 or later. It's a bit earlier if you were born before.
If you have not yet reached FRA and you earn too much money, then you lose part of your benefit. The specifics of how much you lose depend on how much you earn and whether you will hit FRA at any point during the year or not. The limits vary by year, but for 2025, here's how it works:
- If you won't reach FRA at all this year, you lose $1 in annual benefits for every $2 above $23,400.
- If you'll hit FRA sometime this year, you lose $1 in benefits for every $3 earned above $62,160.
Losing benefits is bad in the moment -- but it's not always bad over the long run. When you reach your full retirement age, your Social Security benefit is recalculated based on benefits you miss, so it increases. This means a larger benefit comes to you later. That may be a good thing, since you'll get less Social Security now when you're working but more Social Security later on in life when you might need the money more.
People can't live on Social Security alone. You need money in retirement plans to supplement your benefits. Later in retirement, you may not be earning a paycheck anymore. So you may end up being grateful that you traded some payments while working for bigger benefits later when you're relying on distributions from your 401(k) or IRA.
The surprising reason why working while collecting Social Security increases your benefit
So, now you know that working before FRA causes a reduction in benefits, but that may not always be bad. Next, it's time to consider the surprising reason that working while collecting Social Security could increase your benefit.
That reason: You could boost the average wages that your benefits are based on. And this is true no matter how old you are.
See, your standard Social Security check is based on average wages in the 35 years that you earned the most, after adjusting all your wages for inflation. So, regardless of the fact that you're collecting Social Security while working, you are still doing a year of work that can count in your benefits formula.
If you earn a higher income during these working years than you did earlier in your career, you could replace a lower-earning year with a higher-earning one.
Say, for example, you had a bad year in 1992 when you were working and you earned very little on an inflation-adjusted basis -- but that year was still one of your highest 35 earning years, since your career wasn't that long. If you work and earn a lot in 2025, then 2025 could replace 1992 in your average wage calculation, and you could get a higher benefit since your average wage goes up.
The more years you work at a higher wage, the more lower-earning years you can replace in your average, and the bigger your benefits will be. Be sure to think about that as you decide when to retire, as a bigger Social Security check can make a big difference in your retirement security.
