Ask Rusty: Can I Claim Social Security and Still Work?

Dear Rusty: I will be turning 63 soon. Can I apply for Social Security (SS) and continue to work? Would I be limited to how many hours or how much I could make? I know my monthly SS amount would be cut by 30 percent, or somewhere around that, but how would working affect me? I was trying to read up on this, but the $1 and $2 thing confused me. I have an offer to take a work-at-home position and need to decide soon, but it is a cut in income. The cut would be okay if I could draw my Social Security, too. Signed: Wanting Work at Home Dear Wanting: If you claim your Social Security to start in the month you turn 63, you’ll be claiming four years before your full retirement age (FRA) of 67, which means your monthly benefit at 63 will be about 25 percent less than it would be if you claimed SS at age 67. And if you are working before your FRA, you’ll be subject to the Social Security “earnings test.” The 2024 earnings limit for those collecting early Social Security benefits is $22,320 (this limit changes annually). If your annual earnings exceed the limit, the Social Security Administration (SSA) will assess a penalty of $1 for every $2 you are over the limit. The SSA will recover that penalty amount by withholding future benefits until it recovers what you owe. If your work earnings are under the annual limit, you will get all your monthly SS benefits. But if you exceed the limit, the SSA will find that out after you submit your income-tax return (the following year) and issue you an overpayment notice, telling you how much you owe for exceeding the limit last year. The SSA will then withhold your benefits until it gets back what you owe, or you can repay the agency in a lump sum. To avoid the overpayment notice, it is best to inform the SSA in advance that you will exceed the annual earnings limit, and it will simply withhold your monthly SS benefits during the year for enough months to avoid overpaying you.  So, what you should do depends largely on how much you expect to earn from your new work-at-home position. If your earnings are below the annual limit, no penalty will be assessed. If you only exceed the annual limit by a little bit, then you can still work and earn and simply repay the SSA what is owed for exceeding the limit (or have your SS benefit temporarily withheld). If you only exceed the earnings limit by a little, you’ll still get benefits for most months of the year. But if you significantly exceed the annual earnings limit, you could even be ineligible to receive SS benefits until you either earn less or reach your full retirement age (the earnings limit goes away at your FRA).  So, what you should do depends on what “a cut in income” means in terms of your expected annual-earnings amount. If your total annual earnings will be under the annual limit, your SS benefit won’t be affected. If you only exceed the limit by a little bit, then you will get SS benefits for most months of the year. But if your annual earnings are significantly over each year’s annual-earnings limit, then you won’t get SS benefits for most months of the year and may even be temporarily ineligible to receive benefits.                  

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Russell Gloor is a national Social Security advisor at the AMAC Foundation, the nonprofit arm of the Association of Mature American Citizens (AMAC). The 2.4-million-member AMAC says it is a senior advocacy organization. Send your questions to: ssadvisor@amacfoundation.org. Author’s note: This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). The NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity.