How Continuing to Work Affects Social Security Benefits

Takeaways

• Continuing to work while collecting Social Security can increase future benefits and provide additional income but may also result in benefit reductions before full retirement age.

• Careful consideration of tax implications, Medicare enrollment, and personal financial goals is essential when deciding whether to work while collecting Social Security.

Many Americans nearing retirement age face a financial decision: Should they stop working entirely when they begin collecting Social Security benefits or continue to work? There is no one-size-fits-all answer. Each person’s situation is unique and depends on various factors.

Continuing to work while receiving Social Security can offer financial and personal benefits, but it also comes with potential drawbacks, especially depending on a person’s age and income.

Benefits of Working While Collecting Social Security

Increased Income

The most obvious benefit to working while collecting Social Security is more money in your pocket. Social Security benefits can help cover basic living expenses, but they may not be sufficient alone. Earning a paycheck while receiving benefits can provide greater financial security, allow you to delay tapping into retirement savings, and improve your overall quality of life.

Future Benefit Increases

If you haven’t yet reached your full retirement age (FRA), continuing to work could increase your future Social Security payments in certain cases. Social Security benefits are based on your 35 highest-earning years. If you’re still working and earning more now than you did earlier in your career, those higher wages can replace lower-earning years in your record, permanently boosting your monthly benefits.

Social and Mental Engagement

Work can be about more than earning a paycheck. For many people, staying on the job provides structure, a sense of purpose, and regular social interaction, which are all important for mental health and well-being.

Potential Drawbacks of Working While Collecting Social Security

Though bringing in extra money may seem great, there are some things to consider before dipping into your Social Security benefits while you are still working.

Benefit Reductions Before Full Retirement Age

If you start collecting Social Security before your FRA and continue to work, your benefits could be temporarily reduced. In 2025, for example, $1 in benefits is withheld for every $2 you earn above $23,400. In the year you reach your FRA, a more lenient threshold applies — $1 is withheld for every $3 you earn above $62,160 (in 2025) — but only for the months before you reach your FRA. After that, there’s no reduction regardless of how much you earn.

Note that any benefits withheld are not lost forever. Once you reach your FRA, your monthly benefit will be adjusted upward to account for months when benefits were reduced or withheld. For each year you delay your benefits past your FRA, up to age 70, your benefits increase by about 8 percent per year.

Tax Implications

Earning income while receiving Social Security can push more of your benefits into the taxable category. If your combined income (adjusted gross income + nontaxable interest payments + half of your Social Security benefits) exceeds $34,000 for individuals or $44,000 for married couples filing jointly, up to 85 percent of your Social Security benefits could be taxable.

Medicare Considerations

If you’re 65 or older and working, you may still be covered by your employer’s health insurance. However, you may still need to enroll in Medicare Part A, and possibly Part B and Part D, depending on the type of coverage you get through your employer and other factors. (Failing to enroll on time could lead to late penalties.) If your earnings increase significantly, you may then have to pay more for Medicare premiums.

Who Should Consider Working While Collecting Benefits?

• People who enjoy their jobs and want to stay engaged would likely benefit from staying in their jobs longer.
• Individuals with a strong health outlook who think they will live well past their retirement age also could benefit from working longer.
• Those who need extra income to cover expenses should consider working longer.

Who Might Want to Hold Off on Collecting?

• Individuals who are under full retirement age and have high earnings may want to consider holding off on collecting Social Security benefits.
• People who are concerned about paying taxes on their benefits may want to wait to collect.
• Workers who are planning to retire soon also may want to wait until they retire before they start collecting benefits.

Learn More About Social Security Benefits

Working while collecting Social Security can be beneficial for many older adults, but it requires careful consideration of benefit rules, tax implications, and personal goals. Before making a decision, speak with a financial advisor or an elder law attorney in your area to learn about your options for retirement planning.

For additional reading about Social Security and retirement planning, check out the following:

• Why the Social Security Retirement Age Is Now 67, Not 65
• What to Do When the Social Security Administration Overpays
• Could the Trump Administration Privatize Social Security?
• 10 Ways to Maximize Your Social Security Retirement Benefits
• Five Tips for Starting Retirement Planning in Your 50s