Can You Still Work After Retirement? Myths and misconceptions about Social Security by Ken Mahoney

While many facing retirement think of it as a time to stop working and start doing something else, this is not true for many individuals. Some baby boomer retirees are choosing to continue to work because it is what they want to do. But many more will continue to work out of necessity. It is no longer about turning a certain age and dropping your income earning activities. And whether you continue to work out of necessity or out of want, you may be wondering how continuing to bring in income may affect your ability to receive your Social Security benefit or other retirement income. Will receiving these benefits still allow you to work? The short answer to this question is yes. There may be other factors, however, that come into play.

Recipients of reduced social security

Since Social Security benefits seem to be shrinking, even though your life expectancy seems to be lengthening, if you can choose to retire before you turn 62, which is full retirement age, then you can choose to receive what is referred to as a reduced Social Security benefit and continue to work. This not only helps to extend your Social Security benefits to match your lifespan, but it also allows you to continue working while you still can. The amount that the Social Security benefit is reduced depends on the amount of income you receive from working. For example, in 2007 the yearly earnings limit was $12,960, so if you earned more than $12,960 from working, then you were responsible for repaying $1 out of every $2 that you went over the $12,960 limit.

If you are interested in receiving a reduced Social Security benefit while you continue to work during retirement, the best thing to do is talk with your local Social Security office, so they can help guide you in the right direction.

Benefits of reporting your retirement working wages

Working after you retire and reporting your “retirement income” may actually benefit you financially because it may increase the monthly Social Security benefit amount that you receive when you start drawing your benefits. The way that calculating Social Security benefits works is that it takes into consideration the highest income that you received over the thirty-five years or so you have been working. So if your new earnings in more recent years replace previous years that had lower income earnings, then you may be able to increase the Social Security benefit you are eligible to receive.

At least once a year, you receive a statement from the Social Security Administration that shows recent earnings and projects what your expected monthly Social Security will be. This means it is important that you provide the Social Security Administration with an accurate estimate of your current year earnings. This permits the administration to calculate and pay the correct benefit to you, instead of overpaying or underpaying you. Receiving an overpayment may seem like a good problem to have, but if you receive too much of a benefit, then Social Security can withhold your monthly benefit until you have repaid the overpaid amount.

Full retirement benefits

While you may not be familiar with the partial Social Security benefit, full retirement benefits are typical, with the obvious difference being that full retirement benefit earnings are much higher. At the point where you reach full retirement, there are not any earnings limitations set by the Social Security Administration, so overpayment of is not usually a concern. If, however, you are overpaid during the time that leads up to your full retirement age, then you will be responsible for paying $1 out of every $3 that you were overpaid.

Besides the emotional benefits that working after retirement brings, there may also be financial benefits. Check into how this may benefit you or for more information on Social Security benefits, whether you decide to continue working or not, visit www.ssa.gov.