Many seniors may consider working beyond their full retirement age while collecting a monthly Social Security check, but here are some things to know if you go that route.
Know Your Social Security Full Retirement Age
Your full retirement age (FRA) for Social Security benefits is determined by when you were born.
That matters because you may see a reduction in benefits if you make more than the earnings limit while still under your FRA. The earnings limit for 2019 is $17,640, according to Social Security guidelines.
No Social Security Earnings Limit Past FRA
Working beyond your full retirement age can be a big boon to your earnings because there’s no limit to what you can make.
“You can earn as much as you want — or have the capacity to — and Social Security will not dock your benefits,” certified financial planner Jim Blankenship said.
Watch Out for Social Security Tax Consequences
Blankenship warns that while your benefits won’t be affected by earnings after your FRA is reached, you still may have to pay federal income taxes on your benefits, per USA Today:
If your provisional income — all non-Social Security income, including tax-free interest plus 50% of your Social Security benefit — is less than $32,000 (married) or $25,000 (single or head of household), then none of your Social Security benefit is subject to income tax.
But if your provisional income is between $32,000 and $44,000 (married) or $25,000 and $34,000 (single or head of household), then up to 50% of your Social Security benefit is taxable, says Blankenship. And if it’s over $44,000 (married) or $34,000 (single or head of household), then up to 85% of Social Security benefits are taxable.
Andy Landis, author of “Social Security: The Inside Story” suggests requesting tax withholding on your benefits to lessen that burden.
Your Earnings After FRA May Give You a Social Security Raise
Your Social Security benefits are recalculated if you have new earnings on your record, so you could get a boost to your monthly checks.
The benefits equation uses the 35 years where you made the most, so if you made more in one of your years after your FRA then you’ll see a small boost. The recomputations are known as Automatic Earnings Reappraisal Operations and they are usually calculated in fall. You will get back pay to the previous January.
Keep Working to Maybe Increase Your Social Security Benefits
You won’t get any more delayed retirement credits after 70, but you can keep trying to increase your benefits through working as long as you want.
“Frankly, additional work never hurts, because if the newer year of earnings is lower than the lowest of the 35 years that are being averaged, then the payment amount doesn’t go down; it stays at the same level,” said Kurt Czarnowski, a principal with Czarnowski Consulting.
So working after your full retirement age can really pay off.
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