Ask The Seniors Center: how does returning to work affect my Social Security benefits?

I retired and started to get Social Security. I went back to work–should I get more Social Security?

Warren O.

 

Hi, Warren!

To give you a good answer to this question, we would need to know what year you were born and at what age you chose to retire.

The answers to these questions determine a lot about what happens to your Social Security benefit when you decide to return to work.

Here’s a basic rundown of how your retirement age and post-retirement salary can affect your benefit amount:

  • If you returned to work before reaching your full retirement age (FRA), for every two dollars you earn in income above $17,040, your benefit payments would be reduced one dollar.
  • If you returned to work the year you were to have reached your FRA, for every three dollars you earned in income above $43,360, your benefit payments would be reduced one dollar (this would only be applied to the months prior to your birthday month—or the month you reached your FRA).
  • After reaching the month you hit your FRA, your benefits are no longer reduced regardless of the amount you earn.

Keep in mind your Social Security benefits may be taxable if your earnings push you over an earnings threshold.  You will also pay FICA taxes on your earnings like anybody else.

To answer your specific question, your earnings could very well increase your Social Security benefit. This can happen in a couple of ways:

  • If the Social Security Administration withholds several months of your benefits due to the amount you earn when you return to work, it will recalculate your benefits upon your FRA to account for the withheld benefits.
  • If you earn more after you returned to work than you did during your highest pre-retirement earnings years, the SSA will recalculate your benefit to pay you the increase you may be due. The increased benefit would become active December of the following year.

Here’s a helpful info sheet from Social Security detailing how returning work can affect your benefits and what retirees should consider before and after returning to work:

EN-05-10069

The SSA reviews the earnings records of each working beneficiary every year to determine if adjustments need to be made to benefit payments.  If your earnings have caused your benefit to need some tweaking, the SSA will most likely send you a letter informing you of any increases or reductions that will be enacted.

If you feel you should be receiving some kind of adjustment to your benefit amount, we highly suggest you reach out to an financial professional or your local Social Security office to review your individual situation.

Thanks so much for your question, Warren!

 

Do you have a question about your Social Security benefits or Social Security policy?  Please give us a shout over at our contact page.  We’d love to hear what you have to say and feature your question on our weekly “Ask The Seniors Center” blog post!