Finding ways to occupy your free time is one of the largest decisions you’ll face during retirement. Perhaps learning an instrument, playing a sport, volunteering, or traveling will fill up your calendar, but some retirees choose to seek out part-time work as well (sometimes it’s even a necessity). Though doing so can help you earn extra money to supplement your income as a smart way to pass the time while providing a sense of purpose and structure, it’s important to know how this can impact your Social Security benefits.

Can I still receive Social Security benefits if I continue working?

Yes, you can indeed receive Social Security benefits while working—just like so many others! The Bureau of Labor Statistics projects that by 2033, 30% of U.S. adults aged 65 to 74 and 10% of those aged 75+ will still be part of the workforce. Keep in mind, however, that benefits are sometimes temporarily reduced if earnings exceed certain limits (depending on age).

Know your full retirement age (FRA)

While you can begin receiving Social Security benefits at age 62, you aren’t entitled to 100% of them (AKA your “full retirement benefits” or “full benefit”) until you reach your full retirement age that’s based on your birth year. Born after 1960? Your FRA is 67 (currently).

The age at which you start collecting Social Security directly affects your benefit amount; doing so before reaching your FRA results in a reduced benefit, while waiting ensures you receive the full amount. Familiarizing yourself with your own specific number can shed light on how working during retirement will impact your Social Security benefits.

What are income limits while collecting Social Security?

If you work before reaching your FRA, the income limit and annual limit set by the Social Security Administration (SSA) are calculated based on your earnings within the calendar year (e.g., the “Social Security retirement earnings test”).

In 2026, those who haven’t hit their FRA can earn up to $24,480 before benefits are reduced—with Social Security withholding $1 for every $2 above this limit. This rises to $65,160 in the year you reach your FRA, with $1 withheld for every $3 over the limit until your actual birthday month (after which there’s no limit on earnings). Here are some examples…

How working before your FRA affects Social Security payments

With annual earnings of $25,000, you’ll have excess earnings $520 above the limit with Social Security thus withholding $260 ($1 for every $2 above the $24,480 limit).

How working during your FRA year affects Social Security payments

If you earn $70,000 from January through October and hit your FRA in November, you’ll be $4,840 over the limit with Social Security thus withholding ~$1,613 ($1 for every $3 earned above the limit of $65,160); in this way, you can retain more of your benefits as you approach full retirement.

How working after reaching your FRA affects Social Security payments

Still working? Your income no longer reduces your benefits no matter how much you earn.

2026 Social Security Earnings Limits chart

How the Social Security Administration pays back withheld benefits

When the SSA withholds benefits, you’re not actually losing them as they’re technically just deferred and credited back to you beginning the month you reach your FRA. Let’s assume you begin receiving payments at age 62 and collect $1,200 a month. In this case, the SSA would withhold $5,000 because you earned $34,480: $10,000 over the earnings limit and equivalent to 4.17 months of your $1,200 monthly benefit. Since the SSA doesn’t pay partial months, they round up and withhold 5 full months of payments. The good news? Your benefit will recalculate as soon as you hit your FRA to account for the months withheld, resulting in a higher monthly payment moving forward.

Note that Social Security makes these adjustments automatically based on W-2s and tax returns, but you can also report estimated income at the beginning of the year and then reconcile at the end to minimize (or even eliminate) withheld checks.

Not all income counts towards the Social Security earnings limit

Fortunately, only earnings from work count towards the Social Security earnings limit. Those who aren’t self-employed and work for someone else will see their wages counting towards Social Security limits as soon as they’re earned rather than when they’re paid out. If you earn pay for accumulated sick or vacation days or are awarded 2026 bonuses paid out in 2027, for example, these all count against your 2026 earnings limit. Pension or other retirement plan contributions are likewise also counted when the amount is included in gross wages. Only net earnings are included against the limit for self-employed individuals and generally counted when they receive rather than earn that income.

Special “first year of retirement” rule

Under a special Social Security Administration rule—which applies for one year, typically during the first year of retirement—you can receive a full Social Security check for any whole month you’re retired (regardless of yearly earnings), so as to not penalize people who retire mid-year (or later in the year) and have already earned more than the earnings limit prior to doing so.

How to qualify for the special rule

You must meet a few qualifications to take advantage of this. First and foremost, Social Security must consider you “retired”: meaning you’ve passed their monthly earnings test by engaging in only limited or no paid work. More specifically, your monthly retirement earnings must not exceed $1,950 if you haven’t yet reached your FRA. You also cannot perform substantial self-employment services, meaning devoting more than 45 hours per month to your business (or 15 to 45 hours per month to a business in a “highly skilled” occupation).

How the special rule works before you reach your FRA

Let’s say you plan to retire at age 62 and collect Social Security beginning in November 2026. From January to October, you earn $45,000 before switching to part-time work in November and December. So long as your monthly earnings in those last two months don’t exceed $2,040, you’ll receive your full Social Security benefits for November and December despite your higher earnings earlier in the year.

How the special rule works when you reach your FRA

In the months leading up to your FRA, the rule works in a similar manner—the only difference being you can earn a higher monthly income of up to $5,430 (rather than $2,040) to qualify for your full benefit amount.

Higher Social Security benefits for continued work

Each year, the Social Security Administration reviews the files of all recipients still working and will reconfigure your benefit for the better/automatically process benefits paid the following year (with no special paperwork nor forms needed) if the latest year of earnings represents one of your 35 highest earning years.

Benefits of waiting to collect Social Security benefits if you work

Those who delay claiming Social Security benefits beyond their FRA earn delayed retirement credits that boost monthly payments. Waiting to claim—especially until age 70—can significantly increase your benefit amount, making this a smart Social Security income maximization strategy in the long run. More specifically, you’ll receive a more robust amount (about 7% higher) for each year you wait until reaching your FRA. Wait even longer? The number ticks a smidge higher to ~8% for each year between your FRA and age 70. If your full monthly Social Security benefit is $1,000 (what you’d receive if you wait until your FRA), for example, you’d only receive $700 (~30% less) if you claim benefits at age 62.

Additional considerations while working and collecting Social Security benefits

Social Security benefits are taxable

When planning for retirement, remember that Social Security retirement benefits may be subject to income taxes—especially if you’re collecting them while still working, with the amount taxed depending on your income.

How the federal government taxes Social Security

If your income exceeds a specific threshold, a portion of your Social Security benefits may be taxable at the federal level. Up to 50% of Social Security benefits are subject to federal tax for individuals with an income between $25,000 and $34,000, with this climbing to 85% for those with an income more than $34,000. The threshold is slightly higher for married couples filing jointly: up to 50% of benefits may be taxable if their combined income is between $32,000 and $44,000 (up to 85% if it exceeds $44,000).

How states tax Social Security

You’ll also need to consider state taxes. While most states don’t tax Social Security benefits, some (Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont) do to various extents. Check your state's rules to understand your tax liability.

How income impacts Medicare as it relates to Social Security

Your income can affect both your Medicare premiums and Social Security payments; since Medicare Part B and Part D premiums are typically deducted directly from Social Security checks, earning above a certain income threshold sometimes results in higher premiums known as the “Income-Related Monthly Adjustment Amount (IRMAA).” Keep in mind how your income can influence your healthcare costs in retirement, knowing IRMAA will lower your monthly Social Security check.

In sum: working and claiming Social Security benefits

If you plan on working and collecting Social Security benefits prior to reaching your FRA, it’s helpful to know how your earnings may impact your benefits. This is precisely where proper planning comes into play (ideally with a financial advisor) so you can determine how to best optimize your Social Security benefits based on your own unique situation.

Still have questions about Social Security? Schedule a free consultation with one of our CFP® professionals to get them answered.

Can You Collect Social Security While Working as a Retiree?