Social Security: 4 Times When You Can’t Collect Benefits While Still Working

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There’s no rule against continuing to work and earn income even after you have started collecting Social Security benefits, but your monthly check might be reduced depending on how much you earn.

If you’re younger than full retirement age for the entire year you are working, the Social Security Administration will deduct $1 from your benefit payments for every $2 you earn above the annual limit. In 2023, that limit is $21,240.

In the year you reach full retirement age — 67 for most Americans — the SSA deducts $1 in benefits for every $3 you earn above a different limit. However, it only counts earnings before the month you reach your full retirement age.

If you will reach full retirement age in 2023, the limit on your annual earnings for the months before FRA is $56,520. Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings.

In determining how much to deduct from your payment, the SSA counts only the wages you make from your job, or your net earnings if you’re self-employed. The agency doesn’t include bonuses, commissions or vacation pay. It also doesn’t count pensions, annuities, investment income, interest, veterans or other government or military retirement benefits.

If your Social Security payments are reduced because you earned income above the limit, spouses and children receiving benefits on your work record will have their payments reduced as well, according to the AARP. The earnings cap and rules also apply to the work income of people receiving spousal, children’s and survivor benefits.

Are You Retirement Ready?

If you’re eligible for Social Security retirement benefits and have built up a long enough work record to qualify for them, you don’t really have to worry about not getting benefits even if you still work. You only have to worry about reductions in your monthly payment.

However, there are times when you can’t collect benefits while still working. Here are four of them:

1. You are not old enough to collect benefits. This is the most obvious reason. With rare exceptions, you must be at least 62 years old to qualify for Social Security retirement benefits. If you are younger than that and still working, you can’t collect benefits.

2. You have not put in enough working years. Another eligibility requirement is that you must have worked and paid into Social Security taxes for 10 or more years, according to the SSA. If not, you might not qualify for benefits — even if you are working at age 62 or older. An exception is if you are eligible for a monthly benefit based on a current or former spouse’s work.

3. You are self-employed and did not pay into Social Security. Self-employed workers don’t have Social Security taxes automatically deducted from paychecks like other workers. Instead, you’re responsible for paying them yourself. In this case, you must pay 12.4% of your wages into Social Security — the 6.2% employees are responsible for, and the 6.2% employers are responsible for. This is usually done through quarterly estimated tax payments. If you don’t pay any Social Security taxes through your career as a self-employed individual, you can’t collect benefits even if you reach eligibility age and still working. Not only that — you face fines and penalties from the IRS and other tax agencies for failing to pay your taxes when you were supposed to.

Are You Retirement Ready?

4. You don’t have enough work credits built up. To qualify for Social Security benefits based on a disability other than blindness, you must have worked long enough and recently enough under Social Security’s rules, according to the SSA.  The number of work credits you need for disability benefits depends on your age when you met the disability requirements. You typically need 20 work credits earned in the last 10 years ending with the year you become a person with a disability, though younger workers might qualify with fewer credits. If you don’t have enough credits built up, you can’t collect benefits while still working.

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