Individuals who plan to work while receiving Social Security retirement benefits should be aware that their decision may impact their monthly payments. The effects can vary, potentially leading to an increase in future checks or a temporary reduction or loss of benefits.
For those under the full retirement age (FRA), which is 67 for anyone born in 1960 or later, working can result in benefit reductions if income exceeds certain thresholds. In 2026, earning more than $24,480 before reaching FRA for the entire year will reduce benefits by $1 for every $2 above that amount. If income exceeds $65,160 and FRA is reached during the year but not yet attained, benefits are reduced by $1 for every $3 above that limit. After reaching FRA, there is no reduction regardless of earnings.
While this may mean temporarily forfeiting some Social Security income, the future benefit amount can increase as a result. Benefits are recalculated at FRA to account for any missed payments, potentially leading to higher monthly checks later. This recalculation can provide greater financial security in retirement.
Working can also directly increase monthly Social Security checks. Benefits are based on a percentage of average wages from the highest 35 years of earnings. If current work income exceeds earlier lower-earning years, it may replace those years in the calculation, raising the average and resulting in larger future payments.
Continuing to work later in a career, even if it means temporarily giving up some Social Security before FRA, could significantly enhance retirement income. Retirees are advised to carefully consider whether staying in the workforce for additional years is worthwhile for improving financial stability.