Working During Retirement Can Diminish Your Social Security Contributions

You can apply for partial Social Security benefits at 62. But, as the Social Security Administration states, if you choose to keep working until your full retirement age, they may reduce your payouts. So, you’ll pay $1 less for every $2 you earn above the annual limit.

For 2022, that limit is $19,560. In other words, if you want to work and still collect benefits, you can do that as long as your annual income is no more than $19,560.

What if you keep working in the year you reach full retirement age? If this is your case, SSA withholds $1 for every $3 you earned above the annual limit, which is $51,960 in 2022. After the year you reach full retirement age, anything you earn belongs to you and your monthly benefits won’t be reduced this way.

Here’s some advice. As you approach your retirement date, you should have control over your lifetime earnings and your money-saving ability. If you keep working until full retirement age, you can also make some contributions to a tax-deferred savings plan like 401(k) or traditional or Roth IRA. This will help you to put away more money for retirement.

Obviously, not everyone can keep working after reaching 62, but it’s something to think about if you’re healthy to stay in the labor market.