Social Security Math: How Much Do You Get If You Work in Retirement?

Smiling senior man sitting at a table outside on his patio working online with a laptop and drinking a cup of coffee.
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Even though the Social Security Administration considers you to be retired as soon as you start collecting benefits, you can still continue to work and receive benefits. Working in retirement can end up benefiting you, as these years can count toward your highest-earning years that your benefit amount is based on. However, your current benefit amount may be reduced based on how much you are making.

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Here’s a look at how your Social Security benefit is calculated when you work in retirement.

How Much Can You Earn and Still Get Benefits?

Depending on how much you earn, you may not receive full Social Security benefits.

If you are younger than your full retirement age and earn more than the yearly earnings limit — which is $19,560 for 2022 — the Social Security Administration may reduce your benefit amount. The SSA will deduct $1 from your benefit payments for every $2 you earn above the annual limit.

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If you are currently in the year you reach your full retirement age but are not yet at this age, the SSA will deduct $1 in benefits for every $3 you earn above a different limit — $51,960 in 2022.

Once you reach the month when you will turn your full retirement age, your benefits will no longer be reduced if you continue to work, no matter how much you earn. At this point, the SSA will recalculate your benefit amount to give you credit for the months it reduced or withheld benefits due to your excess earnings.

How Your Benefits Are Calculated When You Work in Retirement

To see how your benefits are calculated when you continue to work in retirement, take a look at these examples provided by the Social Security Administration.

Example 1: You are under the full retirement age, are entitled to $9,600 in benefits for the year and you earn $29,560.

In this scenario, your earnings are $10,000 over the $19,560 limit for those under the full retirement age in 2022. Since the SSA reduces your benefits by $1 for every $2 you earn over the limit, your benefits would be reduced by $5,000, so instead of receiving $9,600 for the year, you would receive $4,600.

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Example 2: You turned the full retirement age in August 2022 but worked the whole year, are entitled to $9,600 in benefits for the year ($800 per month), and you will earn $63,000 during the year, with $52,638 of it in the seven months from January through July.

From January through July, your benefits would have been reduced by $1 for every $3 over the limit. In this case, $52,638 is $678 over the $51,960 limit, so your benefits would be reduced by $226 for these seven months. Your total benefit for this time period would have been $5,600, so instead, you would receive $5,374. Starting in August, you would receive $800 per month, no matter how much you make for the rest of the year.

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About the Author

Gabrielle joined GOBankingRates in 2017 and brings with her a decade of experience in the journalism industry. Before joining the team, she was a staff writer-reporter for People Magazine and People.com. Her work has also appeared on E! Online, Us Weekly, Patch, Sweety High and Discover Los Angeles, and she has been featured on “Good Morning America” as a celebrity news expert. 
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