Is Working While on Social Security a Bad Idea? Here’s the Scoop

It’s a big misconception that once you start collecting Social Security, you’re automatically not allowed to earn any money from a job. Some people opt to continue working well into retirement, and that doesn’t necessarily stop them from getting Social Security.

However, there are rules to follow when it comes to working while collecting Social Security. And knowing what those entail could help you make a more informed decision.

The benefits of working while on Social Security

It’s not a given that Social Security will be able to cover your retirement expenses in full. For the average worker, Social Security will replace about 40% of their pre-retirement wages. That’s not a huge level of replacement income when you really think about it.

It’s true that your spending will likely decline once you’re retired. But that doesn’t mean you’ll be able to get by on just 40% of your former paycheck. So supplementing your benefits with earnings from a job is a great idea, especially if you don’t have a lot of savings to fall back on.

Even if you have plenty of money, working can be a positive thing in retirement. It can serve as a social outlet and give you a reason to leave the house a few times a week.

Many retirees find themselves bored in the absence of a job. So working could be a great thing for your mental health, even if money isn’t much of a concern.

Know the rules about working while collecting Social Security

Once you reach full retirement age (FRA), you don’t have to even think about how much money you’re earning while receiving Social Security benefits. It’s only when you’re collecting benefits before FRA that you need to be mindful of Social Security’s earnings-test limits. These limits represent the amount of money you’re able to earn from a job before having Social Security withheld.

The earnings-test limit changes annually, and it’s $23,400 in 2025. If you earn more than $23,400, you’ll have $1 in Social Security withheld for every $2 of income from a job beyond that limit.

But any Social Security benefits you have withheld won’t be lost forever. You’ll get that money back in the form of larger monthly benefits once you reach FRA.

The earnings-test limit is also much higher if you’ll be reaching FRA this calendar year. In that case, it’s $62,160. If you earn more than $62,160, you’ll have $1 in Social Security withheld for every $3 of income from a job beyond that limit.

So as an example, let’s say you decide to claim Social Security at age 62 and work part-time. If you make $1,800 a month from your job, you’ll be under the earnings-test limit of $23,400, so you won’t have to worry about having some Social Security withheld.

If you make $2,000 a month, you’ll be just over that limit. But you’ll only have a tiny bit of Social Security withheld. And if you know the limits, you can potentially adjust your work schedule to ensure that you don’t exceed the earnings-test limit at all.

All told, working while on Social Security can be a great idea from a financial and mental health standpoint. Just know the rules so you don’t lose out on benefits temporarily – or have that be an unwanted surprise.

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