Social Security and Retirement Earnings

The fact that you've decided to retire doesn't necessarily mean you want to stop working. Retirement is a great time to explore alternative career options, try your hand at a new career, or work part-time to add a little extra cash to your bottom line every month.

However, continuing to work while collecting social security can affect your monthly benefits if you claim these before your full retirement age. Your full retirement age depends on the year you were born, so make sure you're aware of this criterion before you claim benefits.¹

The first and most important thing to know is that once you reach full retirement age, or age 70 (the maximum age at which you can continue to accrue benefits), there is no limit to how much you can earn. Once you've reached full retirement age, you are fully vested in the social security system, so your benefits won't be reduced.²

However, if you continue working after you've retired before your full retirement age and are claiming social security, your benefits could be affected.

• Your Social Security benefits might be temporarily reduced. If you opt to work while receiving social security before your full retirement age, you will only be able to receive a certain level of income before your benefit is temporarily reduced. In 2022, the social security earnings limit is $1,630 per month, or $19,560 per year, for someone who has not reached full retirement age. If you earn more than this amount, you can expect to have $1 withheld from your social security benefit for every $2 earned above the limit.^1,2

• The Social Security earnings limit depends on your age. Your full retirement age is based on the year you were born. The full retirement age for anyone born between 1943 and 1954 is 66 years old. Individuals born in 1960 or later have a full retirement age of 67.^2,3

• You might be eligible for a higher Social Security benefit later. The limit mentioned above changes the year you reach full retirement age. During this year, you lose only $1 of benefits for each $3 you earn above the limit until the month you reach full retirement age. Furthermore, the earnings limit goes up the year you reach this age. For 2022, the earnings limit for the year of full retirement age is $51,860.⁴

Your best bet might be to continue to delay taking social security benefits until your full retirement age or later. Talk with your financial advisor to review your situation and determine when claiming social security is right for you and your family.