There are a few key factors that determine what age someone can work full time while receiving Social Security retirement benefits. The main considerations are the type of benefits being received, the age when benefits are claimed, and how much is earned from working.
When Can I Start Receiving Social Security Benefits?
The earliest age someone can start receiving Social Security retirement benefits is 62. However, claiming benefits at 62 results in permanently reduced monthly payments. For each year benefits are claimed before full retirement age (FRA), payments are reduced by:
- 6.67% per year for those with a FRA of 66
- 5% per year for those with a FRA of 67
Full retirement age depends on birth year:
| Year of Birth | Full Retirement Age |
|---|---|
| 1943-1954 | 66 years |
| 1955 | 66 years, 2 months |
| 1956 | 66 years, 4 months |
| 1957 | 66 years, 6 months |
| 1958 | 66 years, 8 months |
| 1959 | 66 years, 10 months |
| 1960 and later | 67 years |
Delaying benefits past FRA results in a permanent increase in monthly payments up until age 70. For those with a FRA of 66, benefits increase 8% per year. For a FRA of 67, the increase is 7.5% per year.
How Does Working Affect Social Security Benefits?
Working while collecting Social Security benefits under full retirement age will result in $1 being withheld from benefits for every $2 earned over the annual limit. For 2023, this limit is $21,240.
The year someone reaches full retirement age, $1 is withheld for every $3 earned over a separate limit ($56,520 in 2023) only counting earnings before the month full retirement age is reached.
Once full retirement age is reached, earnings no longer reduce benefits and continuing to work may result in a higher benefit amount.
At What Age Can I Work Full Time While Receiving Benefits?
There is no prohibition on working full time at any age while receiving Social Security benefits. However, substantial earnings before full retirement age will result in benefits being withheld.
Some key points on working full time while receiving benefits:
- At age 62 – Full time work will likely result in some benefits being withheld
- At full retirement age – Full time work has no impact on benefits
- At age 70 – Full time work may increase future benefits
Working full time consistently from age 62 through 70 while collecting benefits could result in zero benefits being paid prior to full retirement age, but an increased monthly amount at age 70.
Strategies for Maximizing Benefits While Working
For those that intend to work full time after claiming Social Security, here are some strategies that can help maximize lifetime benefits:
- Delay claiming until full retirement age – Avoid early filing penalties by waiting until 66-67 to claim benefits
- Claim benefits but delay full time work – Claim benefits at 62, but wait to work full time until closer to full retirement age
- Coordinate benefits with spouse – Have the lower earning spouse claim early while the higher earning spouse delays
- Minimize earnings before full retirement age – If already claiming benefits, try to keep earnings under the annual limits
- Plan for zero benefits before full retirement age – Expect to have benefits fully withheld if earning well over the limits
Other Social Security Rules Related to Earnings
In addition to the annual earnings limits, there are some other important Social Security guidelines to understand when working while receiving benefits:
- The retirement earnings test no longer applies after reaching full retirement age
- Bonuses and self-employment income count towards the earnings limits
- Pensions, 401k/IRA withdrawals, interest/dividends, and other passive income are not counted
- Social Security automatically withholds benefits based on estimated earnings
- Adjustments are made later based on actual annual earnings
- Withheld benefits are not truly lost and will increase future monthly amounts
- One-time or temporary spikes in earnings have less impact than ongoing full time work
Other Benefits Available for Early Retirees
In addition to Social Security, there are some other benefit programs that can provide income support to pre-retirees:
- 401(k)/IRA – Tap retirement accounts before age 59.5 via 72(t) plans or Roth IRA conversions
- Pensions – Some pensions can be claimed as early as age 55
- Spousal benefits – Claim spousal benefits if eligible while delaying benefits on own record
- Survivor benefits – Claim survivor benefits from deceased spouse while waiting to file for retirement benefits
- Annuities/insurance products – Annuitize a portion of savings to create guaranteed lifetime income
- Home equity – Downsize or take out reverse mortgage to tap home equity
- Working part-time – Consult or freelance in retirement industry or prior profession
Conclusions
In summary, the age that someone can work full time while collecting Social Security retirement benefits depends on several key factors:
- Benefits can be claimed as early as age 62 but will be reduced if claimed before full retirement age
- Earnings over the annual limits before full retirement age result in benefits being withheld
- Working full time consistently from 62 through 70 may result in zero benefits until age 70
- Delaying claiming and minimizing earnings until full retirement age allows more benefits to be received
- Coordinating benefits with a spouse can help maximize household benefits
- Financial products like pensions, 401ks, IRAs, and annuities can provide alternative income sources
Consulting with a financial advisor can help create an integrated retirement income plan that takes maximize Social Security benefits while still meeting income needs through work and other income sources.
