Working While Collecting Social Security? You May Be in for a Good or Bad Surprise.

A lot of people use Social Security as a reason to stop working. Once they start getting benefits, they figure they can retire and live off of those monthly checks (hopefully along with some savings).

But you should know that you are allowed to have a job while collecting Social Security. This holds true no matter how old you are and what monthly benefit you’re entitled to.

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That said, there are rules you need to follow if you’re working while collecting Social Security. And depending on your situation, working while receiving benefits could lead to a positive surprise or a negative one.

The good surprise

Your monthly Social Security benefits are calculated based on your 35 highest-paid years of income. If you don’t have a full 35-year work history, you’ll have a $0 factored into your benefits formula for each year you do not have an income on file.

As you might imagine, it’s better to have some low-income years within your top 35 than no-income years. So if you’re able to work part-time in retirement and replace a $0 year with even a small income, it could lead to larger Social Security checks down the line.

Let’s say you only have a 33-year work history when you claim Social Security. If you decide to work part-time in retirement and make $12,000 a year, you’ll replace two $0-income years with actual wages. Once those wages are factored in, your monthly benefits should increase.

The less good surprise

While you can work while collecting Social Security, if you do so before reaching full retirement age, you’ll be subject to an earnings test. And earning too much money could result in having some benefits withheld.

Those earnings-test limits change every year. This year, if you won’t be reaching full retirement age at all, you can earn up to $24,480 without having benefits withheld. Beyond that, you’ll lose $1 in Social Security per $2 of earnings.

If you’ll be reaching full retirement age at some point in 2026, the earnings-test limit is much higher. You can, in that case, earn up to $65,160 without having benefits withheld. Beyond that, you’ll lose $1 in Social Security per $3 of earnings.

If you end up having Social Security withheld due to earning too much, you won’t lose that money forever. At full retirement age, the Social Security Administration will recalculate your benefits and pay back that money in the form of larger monthly checks. But you may not appreciate losing a portion of your benefits earlier on.

Make sure to know the rules

Clearly, working while on Social Security can do good things for your finances. But it could also have negative repercussions. Make sure you know the rules so you’re not surprised in a bad way.