What Happens if You Work While Receiving Social Security?

In the year you reach your full retirement age, a less stringent rule applies. If that happens in 2023, you can earn up to $56,520 from January to the month of your birthday with no penalty. But if you earn more than $56,520 during that time, you’ll lose $1 in benefits for every $3 over that limit. And once your birthday passes, you can earn any amount by working without your benefits being reduced at all.
Wages, bonuses, commissions, and vacation pay all count toward the income limits, but pensions, annuities, investment earnings, interest, capital gains and government or military retirement benefits do not. To figure out how much your specific earnings will affect your benefits, see the Social Security Retirement Earnings Test Calculator at SSA.gov/OACT/COLA/RTeffect.html.
 
It’s also important to know that if you do lose some or all of your Social Security benefits because of the earning limits, they aren’t lost forever. When you reach full retirement age, your benefits will be recalculated to a higher amount to make up for what was withheld.
For more information on how working can affect your Social Security benefits see SSA.gov/benefits/retirement/planner/whileworking.html.
 
Be Mindful of Taxes Too

In addition to the Social Security rules, you need to factor in Uncle Sam too. Because working increases your income, it might make your Social Security benefits taxable.

Here’s how it works. If the sum of your adjusted gross income, nontaxable interest, and half of your Social Security benefits is between $25,000 and $34,000 for individuals ($32,000 and $44,000 for couples), you have to pay tax on up to 50 percent of your benefits. Above $34,000 ($44,000 for couples), you could pay on up to 85 percent, which is the highest portion of Social Security that is taxable. About a third of all people who get Social Security have to pay income taxes on their benefits.

For information, call the IRS at 800-829-3676 and ask them to mail you a free copy of publication 915 “Social Security and Equivalent Railroad Retirement Benefits,” or you can see it online at www.IRS.gov/pub/irs-pdf/p915.pdf..

In addition to the federal government, 12 states – Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont and West Virginia – tax Social Security benefits to some extent too. If you live in one of these states, you’ll need to check with your state tax agency for details.