Many working Americans have a plan that could cause them to lose some of their future Social Security benefits. That plan has to do with working while collecting Social Security retirement checks.
Here's what you need to know about working while on Social Security and why it could lead to a temporary loss of some or all of your benefit checks.
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Over half of all current workers are at risk of forfeiting benefits
According to research from the TransAmerica Center for Retirement Studies, an estimated 54% of current workers indicate they plan to keep working even after they have officially retired. This includes 16% who intend to work full time as well as 38% who are interested in working at least part time.
Working while in retirement may seem like a great way to bring in extra money, especially if you have a savings shortfall. The problem comes, though, with the Social Security rules that apply if you have a job and bring in income while you are under full retirement age (FRA) and collecting Social Security benefits at the same time.
See, the rules allow you to work as much as you want to without your Social Security payments being impacted -- but only after you have reached full retirement age, which is 67 for anyone born in 1960 or later.
Many people will retire before then, and if you do and plan to double dip by getting benefits and a paycheck at the same time, you could be faced with an unpleasant surprise.
Your earnings determine if you'll lose part of your Social Security benefits
Those who plan to work while on Social Security need to understand the work limits that apply:
- If you won't reach FRA for the whole year, you can earn up to $23,400 in 2025 or $22,320 per year in 2024. You will lose $1 in benefits for every $2 earned above these amounts.
- If you'll reach FRA sometime in the year but are working before it, you can earn up to $62,160 in 2025 or $59,520 in 2024 before losing $1 in benefits for every $3 earned above that amount.
These work limits adjust upwards in most years, so if you're a few years away from retirement, you can expect them to be higher by the time you get there. There will still be a cap, though, and if you exceed it, you temporarily forfeit some Social Security income.
The Social Security Administration will withhold entire checks to cover the reduction in benefits, and if you earn too much, you could end up entirely losing access to Social Security checks for the time being. You do get credited back early-filing penalties for any month you don't receive a check, though, so your benefits will increase after FRA if you miss out on some Social Security payments due to working too much.
Still, for the 54% of Americans planning to work in retirement, the fact that this puts their Social Security at risk is likely to come as unwelcome news, especially if they were hoping to have multiple-income streams coming in to support their lifestyle in their later years.
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