If you've reached full retirement age, you're entitled to all your Social Security benefits, even if you're also earning a steady income. If you work while receiving benefits before full retirement, your benefits may be reduced, based on your net earnings. When you reach full retirement age, the Social Security Administration will make up any benefits that it held back before, so you don't lose any money.
When reducing your benefits, Social Security measures your net income from employment, whether you work for someone else or for yourself. Employment income includes wages, bonuses, commissions, overtime and vacation pay. Other forms of income are irrelevant to this calculation. You can receive pensions, investment income, interest or veterans' benefits without any reduction to your benefits. Pensions from jobs that didn't contribute to Social Security, such as federal civil service, might be an exception and could reduce your benefits.
Social Security originally set full retirement at 65. Since then, Congress has adjusted the full retirement age upwards, depending on when you were born; for someone born in 1959 or later, the age is now 67. The Social Security Administration has an online calculator for determining full retirement based on when you were born. If you're below full retirement age, the government will withhold $1 from your benefits for each $2 you make above the year's maximum or $1 for every $3 during the year you reach retirement age.
If you're working for someone else, income counts towards Social Security limits for the year that you earned it. If you get a big bonus in December but it's not deposited in your account until January, you count it as earned in December. If you're self-employed, the opposite rule applies: You count it in the year that you receive the money, not when you earn it. Self-employment income you earned the year before qualifying for Social Security but received after you qualified is an exception: You count that in the year you earned it.
If you're both working and receiving Social Security benefits in the coming year, you notify the Social Security Administration at the start of the year how much you expect to earn. If you realize your prediction was off, contact the agency and let them know so they can adjust your benefits. If other members of your family receive benefits based on your income, their benefits may be reduced along with yours; benefits based on their own income will not be affected by your work.
- Social Security Administration: How Work Affects Your Benefits
- Social Security Administration: Retirement Benefits
- Social Security Administration. "Your Retirement Benefit: How It's Figured." Accessed Feb. 20, 2020.
- Social Security Administration. "Workers with Maximum-Taxable Earnings." Accessed Oct. 15, 2020.
- Social Security Administration. "Benefit Calculation Examples for Workers Retiring in 2020." Accessed Feb. 20, 2020.
- Social Security Administration. "Primary Insurance Amount." Accessed Feb. 20, 2020.
- Social Security Administration. "Benefits Planner: Retirement | If you were born between 1943 and 1954." Accessed Feb. 20, 2020.
- Social Security Administration. "2021 SOCIAL SECURITY CHANGES." Accessed Oct. 15, 2020.
- Social Security Administration. "How Work Affects Your Benefits." Accessed Feb. 20, 2020.
- Social Security Administration. "Benefits Planner, Income Taxes and Your Social Security Benefits." Accessed Feb. 20, 2020.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.