Two women, in an office setting, chat with a colleague with his back to us.
Living in retirement

Social Security and working in retirement

Can you continue to work and collect Social Security? Yes, but there's a catch.
7 minute read

Points to know

  • If you work and collect Social Security before full retirement age (FRA), the Social Security Administration (SSA) could temporarily take back some of your benefits.
  • Wages, bonuses, commissions, and vacation pay count against your Social Security benefits, while investment income, dividends, and interest (among others) are excluded.
  • If you reach FRA and continue to work, there's no limit on how much you can earn.

The 3 rules for working & collecting benefits

If you collect Social Security benefits between ages 62 and your full retirement age (FRA) (66 to 67 depending on your birth year), your income is subject to an earnings test. If you earn too much, your benefits will be temporarily reduced—but not lost.

  • In 2019, the earnings threshold is $17,640.
  • Beyond this amount, your benefit will be cut by $1 for every $2 earned above the limit.
  • Once you reach FRA, any benefits that were withheld will be returned to you in the form of higher monthly payments.

The earnings test still applies, but the rules are a little different in the calendar year you reach full retirement age (FRA).

  • In 2019, the earnings threshold is $46,920.
  • Beyond this amount, your benefits will be reduced by $1 for every $3 earned above the limit.
  • The reduction only applies to income earned above the limit in the months leading up to your birthday month.
  • Once you reach your FRA birthday month, any benefits that were withheld will be returned to you in the form of higher monthly payments.

You keep all your benefits, regardless of how much you earn. In fact, working once you reach full retirement age (FRA) can have these advantages:

Higher benefits. You can add to your earnings record, potentially resulting in higher monthly benefits when you claim Social Security.

A boost to your retirement accounts. You can continue to contribute to your IRA and 401(k) including catch-up contributions.

Tax-deferred growth. Continuing to contribute to your retirement accounts gives them the opportunity to grow tax-deferred.

What income counts & when for the earnings test

Wages, bonuses, commissions, and vacation pay from a job in the year they're earned, not paid. For example, bonuses may be earned in one year but paid the following year.

Net earnings from self-employment when they're paid, not earned—unless they're paid the year after you become entitled to Social Security and earned before you became entitled.

Contributions to a pension or retirement plan if that amount is included in your gross wages.

If you retire before reaching full retirement age (FRA), and you've already earned more than the annual earnings limit, there's a special rule that applies for that year.

It allows you to receive a full Social Security check for each whole month the Social Security Administration considers you to be retired, regardless of your yearly earnings.

You're considered retired if:

You're younger than FRA the entire year and your monthly earnings in retirement fall within a certain range ($1,470 or less in 2019) and you didn't perform substantial services in self-employment.

You reach FRA in the year you retire and your monthly earnings in retirement fall within a certain range ($3,910 or less in 2019) and you didn't perform substantial services in self-employment.

 

See how it works: Special rule for the year you retire

GET YOUR SOCIAL SECURITY ESTIMATES

The SSA website provides estimates for how much you'll collect if you start receiving benefits at age 62, your full retirement age (FRA) (between 66 and 67), and age 70.

A Vanguard advisor can help

If you're struggling with making your best Social Security decision, we can help. You'll also get a custom financial plan, ongoing portfolio management, investment coaching, and real-time goal tracking—all at a low cost.

Reach your goals with advice from Vanguard

CONSOLIDATE YOUR RETIREMENT SAVINGS AT VANGUARD

Make your life easier and let us help you reach your goal.

Learn the basics of retirement planning

More help

Build your Social Security strategy

Read our Social Security brochure

Download Introduction to Social Security 

Partner with a Vanguard advisor or call 800-523-9447 to speak with an investment professional.

Partner with a Vanguard advisor or call 800-523-9447 to speak with an investment professional.

All investing is subject to risk, including the possible loss of the money you invest.

Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.

The services provided to clients who elect to receive ongoing advice will vary based upon the amount of assets in a portfolio. Please review the Form CRS and Vanguard Personal Advisor Services Brochure PDF for important details about the service, including its asset-based service levels and fee breakpoints.