Can You Collect Social Security While Working?

Can You Collect Social Security While Working?

It is possible to collect benefits and work, but there are some rules you need to consider. It may have to do with your age or the type of benefits that you will collect. Knowing what is possible and not possible will be an important part of making the right decision for your future. Here are the most important things to consider:

  • Are you full retirement age? The current retirement age is 66 (for most people), but you can begin collecting some of the benefits at the age of 62. However, if you’re younger you will have a reduced benefit based on the amount you earn.
  • What is the benefit limit? For those below the full retirement age for the entire year, $1 will be deducted from your payment benefits for every $2 earned over the annual limit. In 2017, that annual limit is $16,920. (This amount may go up in 2018—always check for latest figures.) When you reach full retirement age, a deduction of $1 in benefits will occur for every $3 you earn. If you reach full retirement age in 2017, the limit on your earnings for the months before full retirement age is $44,880.
  • What are considered earnings? Earnings are calculated only on the wages you make from your job. If you are self-employed, this is just the net earnings. Bonuses, commissions and vacation pay are also included. But pensions, annuities, interest and investment income are not included. Veterans or other government military retirement benefits are also not considered.
  • What happens to new contributions? While you continue to work, you will continue to pay into Social Security as well. There may be a case where your benefits will increase based on your contributions.
  • Do you need to report a change? If you expect the amount you will earn to be different than the amount you originally reported, you must let the Social Security Administration know right away. This cannot be reported online, so you will need to call the office to make this change.

These are just the basics, and it can get very complicated. Also, regulatory and legal changes may alter any of the above numbers from year to year. Before making a decision about simultaneously working and collecting benefits, consult with a financial professional so there are no unpleasant surprises at tax time.

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