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Collecting Social Security While Working

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According to a 2018 report prepared by the Stanford Center on Longevity, most American workers have not saved enough to allow them to retire at age 65 while maintaining their current standard of living. In 2019, a record number of American workers have lost their jobs, further diminishing their likelihood of a fully funded retirement. Many senior citizens are forced to seek employment in order to supplement their social security benefits which alone are unable to sustain them. This report will examine the implications of working while collecting social security, and what you can do to minimize the impact to social security benefits.

Your age at the time you claim your social security benefits is the sole determinant as to the impact on the benefits you actually receive. So let’s review the three key age groups as defined by Social Security Administration.

  • The earliest age you can claim social security benefits is 62. Benefits claimed at age 62 are approximately 70% of what they would have been if you waited until full retirement age.
  • Full retirement age is calculated based on the year you were born.
Year of BirthFull Retirement Age
195566 and 2 months
195666 and 4 months
195766 and 6 months
195866 and 8 months
195966 and 10 months
1960 or later67
  • The latest age to claim retirement is at age 70. If you delay receipt of social security benefits beyond your full retirement age, the amount you receive will increase for each month you delay in accordance with the data contained in the following table:
Year of BirthAnnual Rate IncreaseMonthly Rate of Increase
1933 – 19345.5%0.45%
1935 – 19366.0%0.50%
1937 – 19386.5%0.54%
1939 – 19407.0%0.58%
1941 – 19437.5%0.63%
1943 or later8.0%0.67%
  • If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start receiving benefits.
  • For example, if you reach your full retirement age (67) in June, you may plan to wait until your 69th birthday to start your retirement benefits. Your initial benefit amount will reflect delayed retirement credits earned from your full retirement age through the year before your 69th birthday. In January of the following calendar year, your benefit will increase for the credits earned in the year of your 69th birthday.

If you decide to collect social security before you reach full retirement age, the amount of income you earn will impact the amount of social security you receive according to the following 2020 rules:

  • For 2020, those who are younger than full retirement age throughout the year can earn up to $18,240 per year without losing any of their benefits. After that, you’ll lose $1 of annual benefits for every $2 you make above the threshold.
    • If you claimed benefits during the calendar year, then the annual income threshold is calculated by multiplying $1,520 x number of months you received benefits.
  • Those who reach full retirement age during the year have higher limits and lose less of their benefits. For 2020, you’ll lose $1 in annual benefits for every $3 you earn above the annual limit of $48,600.
    • Unlike the example above, if you reach full retirement year during 2020, you do not prorate the annual limit.
    • Income earned after you reach full retirement age do not count towards the annual limit.
  • For those who decide to retire anytime during 2020
    • You’ll still apply the relevant rule for the earnings test to see if you’d ordinarily have to give up any of your Social Security. However, regardless of your total earnings, you’re still entitled to get Social Security checks for any month in which you’ve officially retired.
  • Once you have reached full retirement age, there are no income restrictions. You can earn as much as you are able and you will continue to receive your social security benefit.

The following sources of income are excluded from the income threshold:

  • Pension payments
  • Most annuity payments
  • IRA and retirement account distributions
  • Dividends
  • Interest income
  • Capital gains

The income that does count in the earnings limit is employment income. That means gross employment wages if you’re an employee and/or your net earnings from self-employment. The rules can be confusing when it comes to income. For example, if you are an employee, the income is attributed to the period it was earned. On the other hand, if you are self-employed, the income is attributed to the period it was paid.

One final note: if you receive a notice from the Social Security Administration that you owe them money, do not assume that you should immediately pay them back. Do reach out to them immediately or they will stop paying your benefits. Sometimes all it takes is an explanation to resolve the misunderstanding.


Michael Lewis, Registered Representative. Securities offered through Cambridge Investment Research Inc., a Broker/Dealer member FINRA/SIPC. Tutor Financial, LLC and Cambridge are not affiliated.

Investment Advisory Services offered through Independent Advisor Representatives of Cambridge Investment Research Advisors Inc, a Registered Investment Adviser

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