As you approach retirement age, the question of whether you can collect Social Security while still working often arises. Understanding how employment affects your Social Security benefits is crucial for making informed financial decisions. The good news is that it is indeed possible to receive Social Security benefits while continuing to work, but there are important factors to consider. Your age, income level and the timing of your benefits can all influence the amount you receive.

A financial advisor can help you plan for retirement and create an income plan aligned with your needs.

Can You Work and Collect Social Security?

Many individuals approaching retirement age wonder if they can continue working while collecting Social Security benefits. The good news is that it is indeed possible to work and receive Social Security, but there are important considerations to keep in mind. Understanding how your earnings can affect your benefits is crucial for making informed decisions about your financial future.

Earning Limits for Receiving Social Security Benefits

One major implication of working while collecting Social Security is that doing so can reduce your benefits up to a certain age. If you haven’t yet reached full retirement age (FRA), there are limits to how much you can earn without reducing your Social Security benefits. In 2025, for example, the earnings limit is $23,400. For every $2 you earn over this limit, $1 is withheld from your benefits.

However, the rules change in the year that you reach FRA. At this point, the earnings limit increases significantly to $62,160 for 2025. For every $3 you earn over this limit, $1 is withheld from your benefits. Then, beginning in your birthday month of the year in which you reach FRA, no amount of income reduces your benefits. When you reach FRA, Social Security recalculates your benefit based on the amount of money withheld, letting you recoup most or all of the lost income.

Taxes on Social Security Benefits

Taxes are another implication to consider. Up to 85% of your Social Security benefits can be taxable if your combined income exceeds a certain threshold. Your combined income is calculated by adding together half of your Social Security benefits to your adjusted gross income and any non-taxable interest you’ve earned.

For individuals earning between $25,000 and $34,000 – or couples earning between $32,000 and $44,000 – 50% of your benefits may be taxed. Above these thresholds, as much as 85% of your benefits may be taxed. This tax bite can significantly reduce the financial upside of working while receiving benefits.

Proper planning is essential to effectively manage the taxes on your Social Security benefits. Understanding the tax implications can help you make informed decisions about when to start taking benefits and how to structure your retirement income. By proactively planning, you can potentially reduce your tax liability and maximize your retirement income.

Pros and Cons of Collecting Social Security While Working

Social Security benefits play an important role in the retirement income plans of most Americans.

Deciding whether to collect Social Security benefits while still working is a significant financial decision that requires careful consideration. Before choosing to collect Social Security on top of your paycheck, first weigh the pros and cons of this decision and how it could impact your long-term financial plan.

Pros

Extra Income: Collecting Social Security while working can provide additional financial support, giving you more flexibility to cover living expenses, pay down debt, or save for the future.
Potential to boost savings: The extra income can allow you to contribute more to savings or retirement accounts, providing a cushion for later years.
Delayed retirement credits: If you wait to collect Social Security after your full retirement age, your benefits could increase by about 8% per year until age 70, thanks to delayed retirement credits.
Work flexibility: Receiving both work income and Social Security may allow for more flexible work arrangements, such as transitioning to part-time work, while still having financial stability.

Cons

Benefit reduction: If you haven’t yet reached your FRA, you’ll face a reduction in benefits beyond certain income limits. While you’ll eventually get this money back after reaching FRA, the immediate reduction in benefits can be frustrating.
Tax implications: If you’re working and receiving Social Security benefits, your combined income may trigger taxes on your benefits.
Lower long-term benefit growth: Collecting benefits before FRA can lock in lower monthly payments for the rest of your life, reducing the potential for higher benefits had you delayed.

Ultimately, the decision to collect Social Security while working should be based on a thorough understanding of your financial situation and retirement objectives. By considering the pros and cons, including income limits, tax implications and long-term strategy, you can make an informed choice that aligns with your financial goals.

Generating your quiz…

Other Factors That Can Affect Your Social Security Benefits

A woman who's still working fulltime looks over her Social Security benefits on her laptop. while sipping a cup of coffee.

Full retirement age is an important part in determining how much of your benefits you receive while working. If you start collecting benefits before FRA, you’ll receive a reduced monthly benefit for the rest of your life. If you work after hitting your FRA, you can earn any amount of income without seeing a reduction in your Social Security payments.

Plus, if your benefits were reduced due to excess earnings before full retirement age, Social Security will recalculate those benefits once you reach full retirement age to repay some or all of the reductions. .

Another factor to consider is the advantage of delaying your Social Security benefits. If you postpone claiming past FRA, your benefits increase by approximately 8% per year up to age 70. This strategy can be particularly beneficial if you plan to continue working and don’t need immediate income from Social Security.

Tips for Retirement Planning

Planning for retirement can be a daunting task, but with the right strategies, you can ensure a comfortable and secure future. Whether you’re considering collecting Social Security while still working or exploring other retirement options, it’s essential to have a well-thought-out plan. Here are some tips to help you navigate retirement planning effectively.

Understand your Social Security benefits: Knowing how Social Security benefits work is crucial for retirement planning. You can start collecting benefits as early as age 62, but waiting until full retirement age or later can increase your monthly payments. Consider how your decision to work while collecting benefits might affect your overall income and tax situation.

Evaluate your retirement savings: Assess your current retirement savings to determine if you’re on track to meet your goals. Consider factors such as your desired retirement age, lifestyle expectations, and potential healthcare costs. Regularly reviewing and adjusting your savings plan can help ensure you have enough funds to support your retirement years.

Diversify your investment portfolio: A diversified investment portfolio can help mitigate risks and maximize returns over time. Include a mix of stocks, bonds, and other assets to balance potential growth with stability. Regularly review your portfolio to ensure it aligns with your risk tolerance and retirement timeline.

Plan for healthcare costs: Healthcare can be one of the most significant expenses in retirement. Consider options like Medicare, supplemental insurance, and health savings accounts to cover potential medical costs. Planning for these expenses can prevent unexpected financial burdens during retirement.

Consider part-time work or consulting: Continuing to work part-time or as a consultant can provide additional income and keep you engaged during retirement. This option allows you to gradually transition into full retirement while maintaining financial stability. Evaluate how this choice might impact your Social Security benefits and overall retirement plan.

By taking these steps, you can create a comprehensive retirement plan that supports your financial goals and lifestyle preferences. Remember, the key to successful retirement planning is staying informed and proactive about your financial future.

Bottom Line

You can collect Social Security while still working, but understanding the nuances is essential to maximizing your benefits. If you have not yet reached full retirement age, your benefits may be temporarily reduced based on your earnings. However, once you reach full retirement age, you can earn any amount without affecting your Social Security benefits. It’s important to note that any reductions in benefits due to early earnings are not lost; they are recalculated and potentially increased once you reach full retirement age. This system ensures that you are not penalized in the long term for choosing to work while receiving benefits.

Social Security Planning Tips

If you’re married, coordinating your Social Security benefits with your spouse can help maximize your household’s overall income. For example, one spouse can claim early while the other delays, ensuring a steady income while allowing the delayed benefit to grow. In some cases, a higher-earning spouse delaying benefits can significantly increase survivor benefits for the lower-earning spouse.
A financial advisor can help you plan for retirement and assess when to start claiming Social Security. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.