- EditorHenry Dahut, J.D.
Henry Dahut, J.D.
Attorney - Legal Publisher - Educator
Henry Dahut is a licensed California trial attorney. Over the course of his 30-plus years practicing law, Henry has represented and counseled countless clients in legal trouble.
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You are permitted to collect Social Security retirement benefits while you are employed. Your earnings, in and after the month you reach your full retirement age, will not affect your Social Security benefits.
However, the Social Security Administration (SSA) will reduce your benefit amounts if your earnings exceed a certain amount in the months before you reach your full retirement age.
First, we need to define your “full retirement age”
What is my full retirement age?
According to SSA, the full retirement age is 66 for people born between 1943 and 1954 and gradually increases to 67 for people born in 1960 or later.
If you’re younger than the full retirement age, SSA will deduct $1 in benefits for each $2 in earnings you have above the annual limit. As of 2022, the gross annual limit is $19,560 in earnings.
In the year you reach your full retirement age, SSA will reduce your benefits by $1 for every $3 in annual earnings over $41,880 until the month you reach full retirement age. After that, you will be entitled to receive your full Social Security benefits no matter how much you earn.
If you are younger than your full retirement age and some of your benefits are withheld because your annual earnings are more than $19,560 the SSA will recalculate your earnings and increase your benefits to factor in those months in which you did not receive full benefits.
Your Social Security retirement benefit is based on your lifetime earnings. The more you earn over your working career, the higher your monthly Social Security benefit will be.
Social Security uses your 35 highest-earning years to calculate your average monthly earnings, which determines your benefit amount.
There is a maximum amount of earnings that are subject to Social Security taxes each year. In 2023, this amount is $160,200. Earnings above this cap are not taxed for Social Security.
If you continue working after you start receiving Social Security benefits, your earnings could increase your monthly benefit if they are higher than one of the 35 years used in your benefit calculation.
What if I retire before or after my full retirement age?
The full retirement age for Social Security is 66-67 for those born in 1943 or later.
You can start receiving reduced Social Security benefits as early as age 62, but your monthly benefit will be permanently reduced.
For each year you delay starting benefits past your full retirement age up to age 70, your monthly benefit will increase by 8%.
What if I continue to work while receiving benefits?
If you start receiving Social Security benefits before your full retirement age and continue working, your benefits may be reduced depending on your earnings.
Once you reach full retirement age, you can work and earn as much as you want without it affecting your Social Security benefits.
- Work for at least 35 years.
- Social Security calculates your benefits based on your 35 highest-earning years.
- If you have worked less than 35 years, any years with $0 earnings will be factored in, lowering your average monthly earnings.
- Try to work for at least 35 years to ensure you have a full 35-year earnings history.
- Delaying claiming benefits until age 70 can significantly increase your monthly check.
- Earn as much as you can during your working years, up to the Social Security tax cap (which was $160,200 in 2023). Higher lifetime earnings translate to higher Social Security benefits.
- Consider your spouse’s earnings: If your spouse has higher lifetime earnings, you may be able to claim a spousal benefit based on their record, which could be higher than your own benefit. This can be especially beneficial if you have a lower-earning work history.
- Avoid early retirement, if possible. Claiming benefits before your full retirement age results in a permanent reduction in your monthly benefit. If you can, try to wait until your full retirement age or later to start receiving benefits.
What if I want to retire overseas, can I still collect my Social Security and Medicare benefits?
Watch Sylvia Gordon of The Medicare Family discuss Social Security and Medicare should you retire or travel outside the country
