A recent survey found that 68% of workers plan to continue working after retirement. This raises the interesting question: How will working impact Social Security benefits? To answer that question, you need to understand three concepts: the earnings test, full retirement age, and taxable benefits.


According to the Social Security Administration, most workers do not have an “official” retirement age. Social Security allows workers to receive benefits from the moment they turn 62 or put off benefits until they turn 70.

The age at which an individual becomes eligible for 100% of their Social Security benefits is called “Full Retirement Age”. Individuals born in 1956, for example, can receive 100% of their Social Security benefits at the age of 66 years and four months.


The earnings test is used to determine if you can start Social Security benefits prior to reaching full retirement age.

The Social Security Administration will subtract $1 from a worker’s benefits for every $2 earned above the annual limit if they start receiving Social Security payments prior to full retirement age. 3 In 2021, the income cap is $18,960.

Social security benefits are reduced by $1 for every $3 earned during the year a worker reaches full retirement age. The limit for 2021 is $50,520. This applies to the month when a worker reaches full retirement age.


Social security benefits are not reduced if you reach full retirement age. Social security benefits are tax-deductible.

Let’s say, for example, that you and your spouse have reached full retirement age and file a joint tax return. You report your combined income on the joint return of between $32,000 to $44,000. Your benefits may be subject to income tax up to 50%. 4

When evaluating Social Security benefits, there are many things to take into account. You can create a program that maximizes all of your retirement income sources, including Social Security by understanding how working might affect your total benefits.

Source: Social Security Administration 2021

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