There are a number of reasons many of us may want to continue working after “retirement.” Earning extra income to pay expenses is at the top of the list for a lot of folks. Keeping active, productive and having a sense of self-worth are also important. Remaining in the work force to pass on skills and knowledge for the younger generation who are just entering their careers is a win-win for all of us.
Yet at the same time, there are some pitfalls to be aware of.
As of 2024, many Americans are navigating the complex decision of whether to collect Social Security benefits while continuing to work. Understanding the rules and implications of this choice is crucial for making informed decisions about retirement planning. Here’s a comprehensive guide to collecting Social Security while still working in 2024.
Full Retirement Age (FRA) and Earnings Limits
- The Full Retirement Age (FRA) is the age at which you can receive full Social Security retirement benefits. For individuals born in 1960 or later, the FRA is 67. If you were born before 1960, your FRA is slightly lower.
- If you collect Social Security benefits before reaching your FRA and continue to work, your benefits may be reduced if your earnings exceed certain limits.
Earnings Limits Before Full Retirement Age
- In 2024, the annual earnings limit for individuals who have not yet reached their FRA is $20,520. If you earn more than this limit, Social Security will deduct $1 from your benefits for every $2 you earn above the limit.
- In the year you reach your FRA, the earnings limit is higher. In 2024, the limit is $54,720. Social Security will deduct $1 from your benefits for every $3 you earn above this limit, but only for earnings before the month you reach your FRA.
No Earnings Limit After Full Retirement Age
- Once you reach your FRA, there is no limit on how much you can earn, and your benefits will not be reduced, regardless of your income.
Strategies for Maximizing Benefits
- Delaying Social Security benefits past your FRA can increase your monthly benefit amount. For each year you delay benefits beyond your FRA, your benefit will increase by a certain percentage, up to age 70.
- Consider coordinating with your spouse if you are married. Spouses may have different FRA and benefit amounts, so coordinating when each spouse claims benefits can maximize the total household benefit.
- Social Security benefits are subject to federal income tax if your combined income exceeds certain limits. Combined income is your adjusted gross income plus nontaxable interest plus one-half of your Social Security benefits.
- Depending on your income level and filing status, you may owe taxes on up to 85% of your Social Security benefits.
Deciding whether to collect Social Security benefits while still working in 2024 requires careful consideration of your financial situation and goals. Understanding the rules and implications of collecting benefits can help you make the best decision for your retirement planning. Consider consulting with a financial advisor or Social Security expert to help you navigate this decision and maximize your benefits.