Approximately 40% of Social Security recipients will continue to work after claiming retirement benefits, according to the Center for Retirement Research. This decision can significantly impact monthly payments, particularly due to the retirement earnings test, which may reduce benefits if earnings exceed set limits. For example, in 2026, earning over $24,480 before reaching full retirement age could result in a $1 reduction for every $2 earned above that threshold.
While working in your 60s may initially reduce Social Security payments, it can lead to larger benefits later. The Social Security Administration credits withheld amounts to your account, effectively delaying your application. This can result in a boost of about 7% in monthly benefits once you reach full retirement age. Additionally, continuing to work can enhance the calculation of future benefits by incorporating more recent earnings, which may be adjusted for inflation.
Understanding the implications of working while collecting Social Security is crucial for effective financial planning and avoiding unexpected reductions in benefits.
Source: fool.com