Does working lower your Social Security benefits?
Claiming Social Security at 62 while working can mean reduced Social Security benefits. How much, and for how long, depends on what you earn and when you reach full retirement age.
The short answer
Before full retirement age, some of your benefits can be held back if your earnings from work go over a yearly limit. That money isn’t lost, and the limit stops once you reach full retirement age.
Before full retirement age, some can be held back
If you claimed Social Security before full retirement age and kept working, part of your benefits can be held back. If you earn over a certain yearly limit from work, Social Security holds back $1 for every $2 you earn above it.
Only work income counts
The limit looks at wages from a job and net earnings from self-employment. IRA withdrawals, pensions, and investment income don’t count toward it.
What changes as you reach full retirement age
In the year you reach full retirement age, a higher limit applies, and less is held back. Once you actually reach full retirement age, the limit stops completely. Nothing is held back, no matter how much you earn.
The money held back isn’t gone
When you reach full retirement age, Social Security recalculates your benefit and gives you credit for the months benefits were held back.
How we handle it
At Sansone CPA & Financial, we plan your Social Security timing alongside the rest of your retirement income.
This article is general education, not tax, legal, or investment advice for your situation. Tax rules change, so talk with us before acting on it.
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