How working after applying for Social Security benefits can cost you thousands

YOUR Social Security benefits are based in part on your work history

The amount of monthly payment you get when you start claiming is proportional to your professional income.

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However, once you start accumulating benefits, continuing an income may reduce your benefits instead of increasing them.

While the Social Security Administration (SSA) pays benefits to those still in full- and part-time employment, there are restrictions.

The rules differ depending on age and income level.

In general, there are two main reasons why post-filing work could reduce your Social Security benefit.

Your payments could be reduced by the SSA

Whether or not your payments are affected by work depends in part on whether you have reached your full retirement age (FRA).

Your full retirement age could be 66 or 67, depending on what year you were born.

If you are younger than full retirement age for all of 2022, SSA will deduct $1 from your benefits for every $2 you earn above $19,560.

If you weren’t in FRA at the beginning of the year, but make it in November 2022, expect to make $52,380 over the 10 months from January to October.

During this period, the SSA would withhold $140, which is $1 for every $3 you earn above the $51,960 limit.

The deductions will then stop once you reach your full retirement age.

Your benefits may become taxable

Social Security benefits are tax-free for many retirees, but become taxable once your income reaches a certain threshold.

This is usually only the case if you have other significant income such as wages or self-employment in addition to your benefits.

Note that other forms of income such as dividends and capital gains contribute to these income thresholds.

You pay taxes on up to 85% of your Social Security benefits, based on Internal Revenue Service (IRS) rules.

• Registration as an individual: If your combined income is between $25,000 and $34,000, you may be subject to income tax on up to 50% of your benefits. If your income is more than $34,000, up to 85% of your benefits may be taxable.
• Submit together: If you and your spouse have combined incomes between $32,000 and $44,000, you may be subject to income tax on up to 50% of your benefits. If you earn more than $44,000, up to 85% of your benefits may be taxable.
• Register married persons separately: You may end up paying taxes on your benefits.

We also explain why it makes sense to start receiving benefits at 70.

We also disclose the salary you need to receive the maximum Social Security benefit in retirement.