This article applies only to individuals who qualify for social security. There are stipulations for individuals who receive pensions and for safety officers (e.g., police and fire). Be sure to discuss your financial situation with your retirement advisor or with HR if you’re unsure what you’ll qualify for.
Whether you’re just trying to make sure you have something to do or you want to make some extra money, a lot of people wonder “can I work while retired?” And the answer is yes! You can. Thanks for reading, have a nice day!
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Okay, yeah, so there’s more to it than just yes. But, for most people, so long as you’re over your full retirement age then you can work while retired and still receive all of your benefits. But, if you retire before your full retirement age, there might be some stipulations.
What is “Full Retirement Age?”
You can technically start receiving social security as soon as you’re 62, but you will be receiving a reduced amount based on how far you are from your “full retirement age.” By retiring early your social security check can be reduced by up to 30%.
Figuring out your full retirement age is pretty simple. As of 2022, it will always be between 65-67 years old. For anyone born before 1960, you’ll need to check with the SSA for your full retirement age by clicking here, but just know it is between 65-67; if you were born in or after 1960 then it’s 67.
If you plan to retire prior to your full retirement age you should check with the Social Security Administration Office’s calculator on their website by clicking here. There you’ll be able to see what kind of reduction you’ll be facing by retiring early.
Note: You can also retire late. For every month past your full retirement age that you delay social security you’ll receive a .667% increase to your monthly social security check. These increases stop once you hit 70 years old. This isn’t always advisable, since you might lose out on money or benefits by doing this. Always talk to a financial advisor before making big choices like this.
The SSA also has a calculator that can help you calculate a late or an early retirement, check it out by clicking here.
How are my Benefits affected by Working while Retired?
Your benefits will fully be intact if you start working after you reach your full retirement age. However, if you retire early and start working, you might face penalties/deductions to your social security based on how much you earn at your job. If you receive a pension that will be unaffected by you continuing to work after retirement.
If you retire less than 12 months before you’re going to reach full retirement age AND you’re still working…
You will receive your reduced social security check based on the number of months you are away from your full retirement age (when you retire) and you will have $1 deducted from your benefits for every $3 you make over $51,960.
To put that into English, for every three dollars you make over $51,960 you get one less dollar in social security. Here’s an example. Madeline is going to turn 67 in December, but she wants to retire in January. She makes $61,960 annually and has a full retirement age of 67. Based on the SSA’s calculator, by retiring in January all of her social security checks will be deducted by 6.11% and for that year she will have her social security payout deducted by $3,333.
If you want to take the math to its logical extreme. Using this calculator, we could see that her social security payout would be around $20,040 annually. But since she retired early that would be reduced to $18,815. Then she would have the $3,333 deducted, leaving her with a $61,960 salary and an additional $15,482 in social security benefits.
If you retire more than 12 months before your full retirement age AND you’re still working…
Unfortunately, this is where you can end up severely diminishing your social security check. You will have social security deducted based on how many months/years you are away from your full retirement age (remember, this can be as much as a 30% lifetime deduction! So, be sure to think carefully). Then for every $2 you make over $19,560 $1 will be deducted from your social security benefits.
Again, to put that into English, you’re basically losing 50 cents from your Social Security for every dollar you make over $19,560. Let’s use the same example, but with rounder numbers. Madeline is making $60,000 a year, but this time she retires at 62. She’s going to have her social security check permanently reduced by 30% and for the next 5 years she will have $20,220 reduced from her social security check. Since we calculated her social security to be around $20,040 (which will be reduced to $14,028 since she retired 5 years early), that means her entire benefit is deducted, meaning she really should have waited to retire.
Should I Work while Retired?
If you retire after you’re 67 and you’re looking for something to keep yourself busy or just want to make extra money, then yes! Definitely work while retired. If you’re not at your full retirement age, maybe you should either postpone retiring or really take a second to consider whether that’s the best financial decision for you.
If you’re worried about the stigma of continuing to work after you retire, just know that a lot of retirees end up choosing to keep working. Some work less hours or in a different position just to maintain routine/structure in their life, others return to the exact same job they had before retirement! It’s entirely up to you.
Safety Officers – Police, Fire, Lifeguard
Since active police officers and firefighters often retire earlier, they generally have a different target age for retiring. This does not change their “full retirement age,” but does create a unique situation when it comes to receiving social security. We recommend you talk with your employer or SDCERs or visit SDCERs website to learn more about whether or not you’ll be receiving social security alongside your pension. While in the process of retiring, be sure to ask your retirement advisor to clarify any details that are unclear concerning your financial situation.