One thing that many people are unaware of is that you can collect Social Security benefits while still working in the US. The Social Security Administration has very strict rules about when and how a retired individual can collect benefits, which, like every other policy gets updated every year, but you do not need to stop working during your retirement to receive a pension, although the amount may not be what you expect if you choose to work and collect benefits at the same time, as there is an income cap that will lower your benefits.
The first thing to remember is that the Social Security Administration distributes five different types of benefits, including retirement, so, as a general rule, you can always work and collect benefits, but you must report all your income to the Administration in order for them to ensure that you are not overpaid. Each type of benefit has its own set of rules on how much you can earn before the benefit is reduced or stopped completely, but that does not mean that you should not join the workforce if you want to.
The five benefits that the Social Security Administration distributes are retirement, family, survivor, disability benefits and Supplemental Security Income, and they all allow beneficieries to work, although as the Administration reminds us “If you receive Social Security disability benefits or Supplemental Security Income (SSI) payments, different rules apply. You must report all your earnings to us.” This is because disability and SSI are meant to be for those who cannot work or cannot work enough to have their basic needs met and are not entitlement benefits like the others.
What are the Social Security annual earnings limits for each benefit?
According to the Social Security Administration “You can get Social Security retirement or survivors benefits and work at the same time. But, if you’re younger than full retirement age, and earn more than certain amounts, your benefits will be reduced. The amount that your benefits are reduced, however, isn’t lost. Your benefit will increase at your full retirement age to account for benefits withheld due to earlier earnings. Spouses and survivors who receive benefits because they have minor children or children with disabilities in their care, don’t receive increased benefits at full retirement age if benefits were withheld because of work.”
What this means effectively is that if you are above full retirement age, regardless of the benefit that you receive you can keep working (if you so choose to) and not have an income cap. In fact, your benefits will increase by the amount withheld, which will be reworked into your benefit calculations. But what exactly is the limit?
“If you’re younger than full retirement age during all of 2025, we must deduct $1 from your benefits for each $2 you earn above $23,400. If you reach full retirement age in 2025, we must deduct $1 from your benefits for every $3 you earn above $62,160 until the month you reach full retirement age.”
Something to take into consideration is that only income earned from work counts towards this earnings limit. Pensions, annuities, investment income, interest, veterans or other government benefits are not counted towards the limit, and for those who are self-employed, only net earnings are considered.
Since this is a more complex situation than just being a regular worker that just earns income or a regular retiree that just collects benefits, there might be some mistakes where the Administration either overpays or underpays, but they are committed to being fair, and as they explain “If you receive payments you aren’t eligible for, we’re required by law to adjust your benefits or recover the overpayment.” But, “Each year we automatically review the records for everyone getting benefits who work. If your latest year of earnings are one of your highest years, we’ll refigure your benefit and pay you any increase you are due.”