This is a pitfall you should always be aware of.
Currently, the typical retired worker receiving Social Security collects about $23,000 per year. For many people, that is not enough income to live comfortably. So you may be thinking about supplementing your monthly Social Security check with part-time income.
Even if you are not financially strapped, there are benefits to working after retirement. For one thing, it’s a reason to leave home. Many retirees also begin to miss the social interaction that comes with belonging to a workplace. Returning to work in some way can have a positive impact on your mental health if it gives you someone to talk to.
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Now, if you are collecting Social Security, you should know that you are not prohibited from holding a paying job. But if you’re not careful, that job can cost you a portion of your Social Security check.
need to know the rules
Once you reach full retirement age, you can earn as much money as you want from your job without worrying about the impact on your Social Security benefits. Rather, your monthly benefits may increase if the income you earn from your job counts toward your highest-paid 35 years of income. But that’s a positive benefit, not a negative one.
However, if you choose to work and collect Social Security benefits before you reach full retirement age, you will be subject to means-tested limitations. And if you exceed that limit, some of your Social Security benefits may be withheld.
Social Security income test limits change every year. But here’s what you need to know heading into 2025.
If you have not reached full retirement age and will not reach retirement age at any time next year, the means-tested limit is $23,400. Beyond that, Social Security is deducted by $1 for every $2 of income. If you have not reached full retirement age as of the beginning of 2025, but plan to reach retirement age at some point next year, the means-tested limit is $62,160. From there, $1 of Social Security is deducted for every $3 of your income.
However, you should know that withheld benefits are not the same as disenfranchisement. When you reach full retirement age, the benefits that were withheld are added back to your Social Security check.
However, if your goal of continuing to work is to improve your financial situation, you may not get there once your income reaches a level where some Social Security income is deducted. Therefore, you should be aware of the limitations of the earnings test and adjust your working hours accordingly if necessary.
actions worth taking
There are many benefits to working as a retiree, and you don’t necessarily have to avoid continuing to work due to the aforementioned limitations. The reality is that in 2025, you will have considerable leeway to earn money at work without risking a portion of your Social Security benefits being garnished. So if you feel like working makes sense to you for some reason, there’s no reason not to pursue work opportunities.
