Collecting Social Security While Working

What happens if you claim Social Security yet continue to work?
What are the rules and penalties associated with simultaneously claiming and working?

Where does the money withheld from your Social Security go?

If you are considering claiming Social Security and maintaining employment, you need to know these answers.

There are two main factors to consider when deciding to collect Social Security and still work:

  1. Full Retirement Age (FRA): Once you have reached your FRA, you can earn as much as you want and collect your full Social Security benefit. When you begin collecting Social Security BEFORE you reach your full retirement age, that is when a portion of your benefit may be withheld. For many, full retirement age is 66.
  2. Earnings Limit: If you are under your full retirement age and claim Social Security, some of your benefits may be withheld. The earnings limits in 2020 are:
    1. $18,240 – $1 of every $2 above this amount will be withheld from your benefit if you are below your FRA and not reaching your FRA this year.
    2. $48,600 – $1 of every $3 above this amount will be withheld from your benefit in the year you reach your FRA. This is money earned before reaching your FRA during that year.

What Income Counts?

Many people are confused about what counts as income toward the earnings limit. Often people think they can’t claim before their full retirement age because the receive a pension above the earnings limit.

  • What counts as earnings:
    • Wages you make from your job
    • Net profit if you’re self-employed.
    • Bonuses, commissions, and vacation pay. 
  • What doesn’t count as earnings:
    • Pensions
    • Annuities
    • Investment income
    • Interest
    • Veterans, government, or military retirement benefits

Where Do “Withheld Benefits” Go?

Social Security benefits are withheld if you earn above certain amounts. Where do those benefits go? Are they simply forfeit?

These benefits actually come back to you in the form of increased future payments. When you claim Social Security, your benefit is calculated using a formula based on your work history and start date. If eight months of benefits are withheld from you because you are claiming and working, then when you reach your FRA, your benefits will be recalculated. Within the formula, your start date will be pushed back by the eights months your benefits were withheld and your new benefit calculation will be higher. You won’t receive the withheld benefits as a lump sum, but you’ll get higher monthly payments for life and will receive the withheld benefits (and potentially much more) over your lifetime.


It often makes sense to delay Social Security, especially if you are continuing to work. However, there are rules in place to allow a person to do both simultaneously. Each situation is different so it is important to run the scenarios and do the math. Check out our complimentary Social Security Maximization software and report to help you determine your best course of action.

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