Continuing to work in retirement can complicate Social Security benefits.

Social Security can be a wonderful supplement to saved retirement income.

How much you receive depends on several factors.

How long did you work?

How much did you make?

How old are you when you begin collecting Social Security?

According to a recent The Sun article titled  “How working changes your Social Security benefits,” whether you continue to work will also impact your Social Security benefits.

A portion of your Social Security benefits may be withheld if you continue to earn income.

Those who work and the spouses of those who work can start collecting Social Security between age 62 and 70.

If collected before Full Retirement Age, the amount will be smaller than if the individual had waited.

Alternatively, if you wait to collect your Social Security benefit after you reach Full Retirement Age, then the amount will be larger.

These additional benefits increase each year until you reach age 70.

If you begin collecting at age 70, you will receive your maximum available benefit.

If you continue to work in retirement and collect Social Security at the same time, you may have a reduction in your monthly benefit.

This is calculated from the Retirement Earnings Test.

The test applies to earned income rather than investment or pension income.

For those who are younger than their Full Retirement Age, $1 will be taken from the benefit for every $1 earned above $18,240 in 2020.

This withheld money will be added back into your benefit once you reach Full Retirement Age.

If you are reaching Full Retirement Age in 2020, $1 will be withheld from every $3 you earn over $48,600.

Should you no longer work when taking Social Security?

It depends.

For example, if you need to work at a higher wage to replace lower income years for the Social Security benefit calculation, it may be worthwhile to take the penalty.

Consider your goals and discuss your circumstances with an experienced financial advisor to determine the best approach for your overall retirement goals.

Reference: The Sun (June 21, 2020) “How working changes your Social Security benefits”