Can You Draw Social Security And Still Work At 66?

Retirement Read Time: 4 min

How Will Working Bear on Social Security Benefits?

In a recent survey, 68% of current workers stated they plan to work for pay subsequently retiring.¹

And that possibility raises an interesting question: how will working touch on Social Security benefits?

The answer to that question requires an agreement of three key concepts: full retirement age, the earnings test, and taxable benefits.

Full Retirement Age

Most workers don't face an "official" retirement date, according to the Social Security Administration. The Social Security programme allows workers to offset receiving benefits equally soon every bit they accomplish age 62 – or to put off receiving benefits upward until age lxx.

"Full retirement age" is the age at which individuals become eligible to receive 100% of their Social Security benefits. For example, individuals built-in in 1956 can receive 100% of their benefits at historic period 66 years and 4 months.²

Earnings Exam

Starting Social Security benefits before reaching full retirement age brings into play the earnings test.

If a working individual starts receiving Social Security payments earlier full retirement age, the Social Security Assistants will deduct $1 in benefits for each $2 that person earns in a higher place an annual limit. In 2022, the income limit is $18,960.³

During the yr in which a worker reaches full retirement historic period, Social Security benefit reduction falls to $1 in benefits for every $three in earnings. For 2022, the limit is $50,520 before the month the worker reaches total retirement age.³

For example, allow'southward presume a worker begins receiving Social Security benefits during the year he or she reaches full retirement age. In that year, before the month the worker reaches full retirement historic period, the worker earns $65,000. The Social Security benefit would be reduced every bit follows:

Earnings higher up annual limit	$65,000 – $fifty,520 = xiv,480
One-tertiary excess	$14,480 ÷ 3 = $4,827

In this example, the worker's annual Social Security do good would take been reduced by $4,827 because they are continuing to piece of work.

Taxable Benefits

One time you attain full retirement historic period, Social Security benefits volition non be reduced no matter how much yous earn. Still, Social Security benefits are taxable.

For example, say you file a joint return, and you lot and your spouse are past the full retirement age. In the joint return, y'all report a combined income of between $32,000 and $44,000. You may have to pay income revenue enhancement on as much equally 50% of your benefits. If your combined income is more than $44,000, as much as 85% of your benefits may be discipline to income taxes.^four

There are many factors to consider when evaluating Social Security benefits. Understanding how working may affect total benefits can help you lot put together a program that allows you to make the well-nigh of all your retirement income sources – including Social Security.

Retirement Age

Source: Social Security Administration, 2022

one. EBRI.org, 2022
2. SSA.gov, 2022
3. SSA.gov, 2022
four. SSA.gov, 2022

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