If you’re in your late 50s or early 60s, you’ve probably given some thought to when you’ll sign up for Social Security. You want to choose a claiming age that will enable you to live comfortably today and hopefully get as much from the program as possible, but that’s not as straightforward as you might think. There are several factors to consider to pinpoint the best claiming age for you.
One of those is whether you plan to claim benefits before you leave the workforce. There are pros and cons to working and claiming Social Security at the same time. It helps to understand both before you decide whether it’s the right move for you.
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Two pros of working while claiming Social Security
Here are two key benefits of working and claiming Social Security at the same time.
1. You may enjoy a higher standard of living today
Income from your job and a monthly Social Security check may enable you to enjoy a higher standard of living today than you could from either your Social Security benefits or your salary alone. This can be a powerful motivator if you want to be able to spend more money without draining your retirement savings too quickly.
2. Your income from your job could increase your future Social Security benefits
Your Social Security benefit is based on your average monthly earnings during your 35 highest-earning years. Since most people earn more later in their careers, working longer than 35 years can boost their monthly benefits by removing some of their earlier, lower-earning years from their benefit calculation.
This doesn’t stop once you’ve signed up for benefits either. If you continue to work and earn a salary that’s higher than what you’ve earned in years past, the Social Security Administration may adjust your monthly benefit in future years based on your recent work history.
Three cons of working while claiming Social Security
Keep these three drawbacks in mind when deciding whether to claim Social Security while you’re still working.
1. Early claiming may reduce your monthly benefits
It’s possible to work and claim Social Security without applying early — that is, under your full retirement age (FRA). This is 67 for most workers today. But if you choose to sign up early and claim while you’re still working, it may not produce the income you’d hoped for.
That’s because the Social Security Administration reduces your checks for every month you receive benefits under your FRA. You can lose up to 30% by claiming right away at 62. So if you’re under your FRA and believe you could get by on your income from your job alone, you may want to consider delaying Social Security until you retire or qualify for your maximum benefit at 70 so you can get more per check.
2. You could be at risk of Social Security benefit taxes
The federal government can tax up to 85% of your Social Security benefits if your provisional income — adjusted gross income (AGI), plus nontaxable interest from municipal bonds, and half your annual Social Security benefit — exceeds $34,000 for a single adult or $44,000 for a married couple.
Earning income from a job could put you at a greater risk of having a higher AGI, which in turn increases your risk of benefit taxes. If this concerns you, waiting to claim Social Security until you retire and your income drops could make sense.
3. You might lose money to the earnings test
Those who claim Social Security while continuing to work under their FRA could have money withheld from their checks due to the earnings test. You’ll lose $1 for every $2 you earn over $23,400 in 2025 if you’re under your FRA all year. You only lose $1 for every $3 you earn over $62,160 if you reach your FRA this year and earn this much before your birthday.
It’s possible the earnings test could completely eliminate checks for some higher earners, but this is only a temporary loss. The Social Security Administration increases your benefit at your FRA to make up for what it withheld before.
There isn’t a right or wrong answer about whether to claim Social Security while working. If you’re comfortable with the consequences — good and bad — go ahead. But if you’re wary about shortchanging yourself or increasing your tax bill, consider waiting to apply for Social Security until you retire.
