By the time a lot of people are ready to start collecting Social Security, they've made the decision that they're done being a part of the workforce. But sometimes, things change.
You may retire and manage OK for a few years only to realize money is tight. And if so, you may decide to go back to work after claiming Social Security.
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The good news is that working while receiving Social Security benefits is absolutely allowed. But you should know that while doing so could lead to larger monthly checks in the future, it could also lead to withheld benefits in the near term.
Why your benefits might increase
Social Security's benefits formula takes your 35 highest-paid years of earnings into account when calculating the monthly payments you're eligible for. But if you don't have a full 35-year work history, you'll have a $0 factored into that formula for each year you're missing an income.
If you work after signing up for Social Security, those wages will count toward your earnings history, and they could replace one or more years of zero income. So once the Social Security Administration is able to recalculate your benefits based on your newly earned wages, your monthly payments could increase.
Why your benefits might decrease temporarily
In some cases, working while receiving Social Security could cause you to lose out on benefits in the near term. You run this risk if you have not yet reached your full retirement age for Social Security, which is 67 if you were born in 1960 or later.
If you work while collecting Social Security before full retirement age, you'll be subject to an earnings test. And exceeding its limit could mean having some of your Social Security benefits withheld.
In 2026, you can earn up to $24,480 without having any Social Security withheld. From there, you'll have $1 in benefits withheld per $2 of excess earnings.
If you'll be reaching full retirement age in 2026, you can earn up to $65,150 without having any Social Security withheld. From there, you'll have $1 in benefits withheld per $3 of earnings beyond the limit.
It's important to know that withheld benefits in this situation are not lost forever. Rather, you get that money back in the form of larger monthly checks once you reach full retirement age. But for cash flow planning purposes, it's important to understand the consequences of earning enough money to exceed the earnings-test limit.
Going back to work after claiming Social Security is a decision that could make sense for you both financially and emotionally. You may find that a job gives you a way to fill your days, even if you don't particularly need the money. Just know that while working in this situation could lead to larger Social Security benefits, it could also cost you a portion or even all of your checks temporarily.
