The Quick Answer
Yes, you can work full time and collect your full Social Security retirement benefit at age 66. There is no earnings limit or penalty once you reach your full retirement age. Your full retirement age is 66 if you were born between 1943 and 1954. At this point, you can earn as much as you want from working without reducing your Social Security benefits.
When Can I Start Collecting Social Security?
You can start collecting Social Security retirement benefits as early as age 62. However, if you start collecting before your full retirement age, your benefit amount will be permanently reduced. For example, if your full retirement age is 66, but you start collecting at 62, your benefit will be reduced by 25%.
On the other hand, if you delay collecting past your full retirement age, you can earn delayed retirement credits that will boost your benefit amount. Credits max out at age 70, increasing your benefit by up to 32% if your full retirement age is 66.
So in summary:
- Age 62 – earliest you can collect, but with a reduced benefit amount
- Full retirement age (66) – collect your full unreduced benefit amount
- Beyond full retirement age – earn credits to boost your benefits up to age 70
How Work Affects Benefits Before Full Retirement Age
If you are collecting Social Security but have not yet reached full retirement age, your benefits are subject to an earnings test. Here’s how it works in 2023 if your full retirement age is 66:
- If you are under 66, $1 in benefits will be deducted for every $2 you earn over $21,240.
- In the year you reach full retirement age, $1 in benefits will be deducted for every $3 you earn over $56,520 in months prior to attaining full retirement age.
For example, if you started collecting Social Security at age 62 in 2023 and earn $61,000 from working, your Social Security benefit would be reduced by $19,880 ($61,000 – $21,240 = $39,760 / 2 = $19,880).
Benefit Reduction Is Not Permanent
It’s important to note that the benefit reduction from working before full retirement age is not permanent. Your benefit will be recalculated and increased at your full retirement age to account for the months of withheld benefits. In most cases, you can recover the full amount within about 16 to 20 months after reaching full retirement age.
No Earnings Limit After Full Retirement Age
Once you reach full retirement age, currently 66, you can earn any amount from work without reducing your Social Security benefits. That’s because there is no earnings limit or penalty after full retirement age.
So if your full retirement age is 66 and you continue working full time while collecting benefits, you get to keep all of your earnings and receive your full Social Security payment.
Other Ways Working Affects Social Security
Continuing to work can affect your Social Security benefits in a few other ways:
1. Increase your future benefit amount
When you work and pay Social Security taxes on your earnings, it increases your lifetime earnings history. Higher lifetime earnings can increase your basic Social Security benefit when you first claim since initial benefits are based on your 35 highest earning years.
2. Qualify you for higher benefit if you initially claimed early
As mentioned earlier, additional work can also increase your benefit later on if you initially claimed benefits before full retirement age and had your benefit reduced. Once you reach full retirement age, your benefit will be recalculated using your new earnings record, and increased if your new benefit amount is higher.
3. Trigger benefit re-evaluation
If you work while collecting Social Security, the SSA will conduct periodic re-evaluations to see if your additional earnings qualify you for a higher benefit. Typically, re-evaluations are done each year you have new earnings until you reach full retirement age.
How Much Can I Earn While Collecting Social Security?
There are no limits on how much you can earn from work while collecting Social Security after you reach full retirement age. Here is a table summarizing how earnings affect benefits at different ages:
| Age | Earnings Limit | Benefit Reduction |
|---|---|---|
| Under full retirement age | $21,240 (in 2023) | $1 deduction for every $2 over limit |
| Year reach full retirement age | $56,520 (in 2023) | $1 deduction for every $3 over limit in months prior to reaching full retirement age |
| Full retirement age and above | No limit | No benefit reduction |
As the table shows, you can earn any amount without reductions once you reach full retirement age. For early claimers, benefit reductions from working are gradually phased out as you approach full retirement age.
Should I Work While Collecting Social Security?
There are a few key factors to consider when deciding whether to work while collecting Social Security:
1. Need for income
If you don’t have enough retirement savings or pension income to cover your living expenses, working can provide a critical source of additional income. Social Security typically only replaces about 40% of pre-retirement income.
2. Age you claimed benefits
If you claimed benefits early at age 62, working can help offset the benefit reduction from filing before full retirement age. Additional earnings can boost your benefit back up later on.
3. Health and life expectancy
If you start collecting Social Security early due to poor health, working full time may not be feasible. Your expected longevity can also impact when to claim benefits and whether to continue working.
4. Job satisfaction and prospects
Do you enjoy your job and want to keep working? Does your employer want to retain you as a worker and offer accommodations like flexible schedules? If so, continuing to work can allow you to stay active and engaged.
5. Spousal benefits
If you are the higher earning spouse, you may want to delay collecting Social Security for as long as possible to maximize spousal and survivor benefits for your partner. Working longer can enable you to wait to claim.
Strategies to Maximize Social Security and Work Income
If your goal is to optimize lifetime benefits from Social Security while earning income from work, consider these tips:
Claim at Full Retirement Age
Wait to claim benefits until your full retirement age, currently age 66. This ensures you get 100% of your earned benefit amount without early filing reductions.
Delay Claiming Past Full Retirement Age
Each year you delay claiming benefits beyond your full retirement age up to age 70 earns you delayed retirement credits that permanently increase your monthly benefit. Delaying claiming helps offset lost income from quitting work.
Minimize Early Claiming Reductions
If you filed for benefits prior to full retirement age, work just enough to stay under the annual earnings limits to avoid benefit reductions. After reaching full retirement age, earnings no longer reduce your benefits.
Coordinate Spousal Benefits
The higher earning spouse can delay claiming benefits while the lower earning spouse claims early. This maximizes spousal benefits for the lower earner while the higher earner accrues credits.
Account for Taxation of Benefits
Working while collecting Social Security also determines the potential taxation of your benefits, so factor this into your overall planning.
Conclusion
Reaching your full retirement age is a major milestone for collecting Social Security while working. Once you attain full retirement age, currently 66, you can earn any amount from employment without incurring benefit reductions or limits. This allows you to work as much as you want while receiving your full Social Security payment.
However, guidelines vary depending on when you claimed benefits in relation to your full retirement age. If you started collecting before reaching full retirement age, your benefits may still be reduced by a portion of your earnings. But once you cross that threshold, the Social Security earnings test no longer applies.
With Americans living longer, healthier lives, continuing to work into your 60s and beyond can provide mental engagement, social interaction, and fulfillment along with needed income. As long as you understand how earnings can impact your benefits before and after full retirement age, working full time while collecting Social Security is certainly feasible at age 66 and beyond.