Social Security Tips for Working Retirees

Planning to work in retirement or already doing so? You’re not alone. In a recent survey, 37% percent of people indicated that they plan to work either full-time or part-time during retirement.1

Why is this becoming an increasingly popular decision? Working into retirement can be an attractive option because it can help you build retirement savings, allow you to have more funds to make catch-up contributions, and in some cases, provide continued access to health care insurance.

But there are also restrictions in place that can directly impact your finances. If you are working in retirement—or plan to—and you’ve already begun taking Social Security benefits, you need to be aware of how your Social Security income may be taxed and of the earned income thresholds that determine any reductions in benefits.

Here are some tips that can help you preserve the retirement savings you worked hard for.


Post-retirement, you will hear the terms “earned” income and “unearned” income a lot. Earned income represents any wages, bonuses, vacation pay, and commissions; while unearned income represents all income that is not earned, such as investment income, pension payments, and government retirement income—including Social Security.

With 86% of retirees receiving income from Social Security,2 chances are you will too, which can subject you to the following restrictions:

  • If you claim your Social Security benefits at age 62 (the earliest age you can claim) and choose to continue to work, you will be given an earnings restriction until you reach your full retirement age (65 to 67, depending on when you were born). If you earn income in excess of your earnings limit ($17,040 in 2018), your benefits will be reduced by one dollar for every two dollars of earned income.
  • If you reach your full retirement age during 2018, your earned income limit rises to $45,360 and the benefits reduction becomes one dollar for every three dollars earned over the limit until the month you reach your full retirement age.
  • After you turn 67, there are no earnings limits or benefit reduction based on your earned income.

These benefits are not truly “lost,” however. If your benefits have been reduced due to earning too much prior to reaching your full retirement age, you will get these benefits back at your full retirement when your monthly Social Security check will be increased to account for benefits withheld earlier due to excess earnings.


As discussed earlier, working retirees can have their Social Security benefit taxed if it is above certain levels of “combined income.” Combined income represents your adjusted gross income, nontaxable interest, and one-half of your Social Security benefits.

Note: California is not one of the 13 states that currently taxes Social Security benefits.


If you earn any wages in retirement, they will be subject to Social Security and Medicare taxes because there is no age limit on these types of withholdings. However, these same earnings can also count toward the calculation of your benefits.


Generally, the later you claim, the more you qualify to receive. The following chart (which assumes you are 62 with an annual salary of $100,000 at retirement) can help you understand how it works. The first row of the chart displays benefit amounts you would receive by claiming at various ages, while the bottom row of the chart expresses the percentage difference of the benefit amount received by claiming at your full retirement age if you were born between the years 1943 to 1954.3

1“Retired, But Working,” January 19, 2016.

2“Infographic: Your Guide to Social Security,” October 14, 2014.

3“Social Security Benefits,”

4“Social Security Benefits Calculator: When Should You Claim Yours?” Social Security benefits are calculated based on an estimated annual salary that is representative of the person’s average salary over his or her work history and including the top 35 years of earnings.


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