Retirement is a great time to explore alternative career options, try a new career, or work part-time to add a little extra cash to your bottom line.
However, continuing to work while collecting social security can affect your monthly benefits if you claim these before your full retirement age. Your full retirement age depends on the year you were born, so make sure you're aware of this criterion before you claim benefits.1
The first and most important thing to know is that once you reach full retirement age, or age 70 (the maximum age at which you can continue to accrue benefits), there is no limit to how much you can earn. Once you've reached full retirement age, you are fully vested in the social security system, so your benefits won't be reduced.2
However, if you continue working after you've retired before your full retirement age and are claiming social security, your benefits could be affected.
- Your Social Security benefits might be temporarily reduced. If you opt to work while receiving social security before your full retirement age, you will only be able to receive a certain level of income before your benefit is temporarily reduced. In 2022, the social security earnings limit is $1,630 per month, or $19,560 per year, for someone who has not reached full retirement age. If you earn more than this amount, you can expect to have $1 withheld from your social security benefit for every $2 earned above the limit.1,2
- The Social Security earnings limit depends on your age. Your full retirement age is based on the year you were born. The full retirement age for anyone born between 1943 and 1954 is 66 years old. Individuals born in 1960 or later have a full retirement age of 67.2,3
- You might be eligible for a higher Social Security benefit later. The limit mentioned above changes the year you reach full retirement age. During this year, you lose only $1 of benefits for each $3 you earn above the limit until the month you reach full retirement age. Furthermore, the earnings limit goes up the year you reach this age. For 2022, the earnings limit for the year of full retirement age is $51,860.4
Your best bet might be to continue to delay taking social security benefits until your full retirement age or later. For more information on social security, as well as alternative options for working during retirement, feel free to contact us at California Retirement Advisors (cradvisors.com) to review your situation and determine when claiming social security is right for you and your family.
By Christian Cordoba
CERTIFIED FINANCIAL PLANNER™
Founder, California Retirement Advisors
Investment advisory services offered through Mutual Advisors, LLC DBA California Retirement Advisors, a SEC registered investment adviser. Securities offered through Mutual Securities, Inc., member FINRA/SIPC. Mutual Securities, Inc. and Mutual Advisors, LLC are affiliated companies. CA Insurance license #0B09076. This content is developed from sources believed to be providing accurate information and provided by California Retirement Advisors. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. California Retirement Advisors, nor any of its members, are tax accountants or legal attorneys and do not provide tax or legal advice. For tax or legal advice, you should consult your tax or legal professional.