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Is It Still Advisable To Work After Receiving Social Security?

The cost of retirement is skyrocketing, and saving money for the future is becoming more difficult. According to a 2023 analysis from the Transamerica Centre for Retirement Studies, just over half of workers claim their savings will serve as their main source of earnings in retirement, and roughly one-quarter anticipate relying significantly on Social Security. Continuing to work in retirement, even if it’s part-time, is an additional choice.

This may be a wise strategy to increase the amount in your savings, lessen your reliance on Social Security, plus generate some additional revenue. However, if you continue to work after receiving benefits, it can come back to haunt you. Your Social Security benefits may be cut or possibly withheld completely, depending on your income. What to anticipate if you keep working after submitting a benefit application.

Impact Of Your Income On Your Social Security Benefits

Finding out your FRA (full retirement age) is the first step. For everyone, it is between 66 and 67 years old; for those born in the year 1960 or after, it is 67 years old. You have no reason to be concerned about this if you’ve already met your FRA because your income won’t change how much benefits you receive. However, you will be exposed to the income test if you haven’t yet attained your FRA. This annual income cap will decide how much, whether any, of your fringe benefits, are withheld from your pay each year.

For illustration, let’s imagine you work for a company that pays $30,000 a year and are 62 years old using a FRA of 67. Since you won’t hit your FRA around 2024 in this scenario, the $22,320 cap applies. Because your income exceeds that cap by $7,680, your benefits will be lowered by $3,840 annually or $320 monthly. These cuts may be quite significant at times. If your income is far more than the revenue test limit, you may even be subject to having your full benefit withheld, depending on your circumstances.

Is Continuing To Work After Receiving Benefits Worth It?

The positive thing is that benefit cutbacks are temporary, even if they occur. The SSA (Social Security Administration) will recalculate your benefit to reflect any money withheld after you reach your full retirement age (FRA), at which point you will begin receiving larger checks. That being said, it can make sense to wait to start receiving Social Security benefits until you have reached your FRA if are aware you will continue to work after retirement. It might not be wise to begin filing claims just soon, particularly if your income from work is high enough that most of your payment will be withheld.

That might not be an option, though, in some circumstances. Returning to work could be a wise decision if you are in financial need and have already begun receiving benefits, even if it implies your Social Security is going to be cut. The good news is that whenever you hit your FRA, you’ll still get those bigger checks. A more financially stable retirement can be achieved by working while receiving Social Security benefits, but it’s crucial to understand how your income will impact your benefit amount. Knowing the earnings caps will help you make sure you’re as ready as possible for retirement.

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