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Understanding the Impact of Returning to Work After Starting Social Security Benefits
Have you already started collecting Social Security retirement benefits but are now thinking about heading back to work? Maybe retirement wasn’t quite what you expected, or perhaps your financial situation has changed Whatever your reason, it’s important to understand how returning to the workforce might affect your Social Security benefits
As someone who’s helped many retirees navigate this transition, I can tell you that the rules aren’t always straightforward. The impact on your benefits depends largely on your age and how much you earn. Let’s break down what you need to know before you dust off that resume.
How Age Affects Your Social Security Benefits When You Return to Work
If you lose your Social Security benefits because you go back to work, your full retirement age (FRA) is the most important thing to consider. Here’s what you need to know:
If You’re Under Full Retirement Age
If you’re younger than your full retirement age for the entire year, Social Security will deduct $1 from your benefits for every $2 you earn above the annual earnings limit. For 2025, that limit is $23,400.
For example if you’re 64 and earn $30000 in 2025, you’d be $6,600 over the limit. Social Security would then withhold $3,300 from your benefits ($1 for every $2 over the limit).
If You’ll Reach Full Retirement Age During the Year
The rules are a bit more generous in the year you reach your full retirement age In this case, Social Security will deduct $1 from your benefits for every $3 you earn above a higher limit, but only counting earnings before the month you reach full retirement age
For 2025, if you’ll reach full retirement age during the year, the earnings limit is $62,160. And remember, only earnings before the month you hit your full retirement age count toward this limit.
If You’re Already at Full Retirement Age
Here’s the good news: starting with the month you reach full retirement age, your benefits won’t be reduced no matter how much you earn. You can work as much as you want and still receive your full Social Security benefit.
What Counts as Earnings?
When Social Security calculates how much to deduct from your benefits, they only count certain types of income:
Counted as earnings:
- Wages from your job
- Net earnings from self-employment
- Bonuses
- Commissions
- Vacation pay
Not counted as earnings:
- Pensions
- Annuities
- Investment income
- Interest
- Veterans benefits
- Government or military retirement benefits
The Special Rule for Mid-Year Retirement and “Unretirement”
There’s a special rule that might help if you retire and then decide to go back to work within the same year. Under this rule, you can receive a full Social Security check for any month you’re considered “retired,” regardless of your yearly earnings.
If your earnings are less than a certain amount each month and you don’t do much work for yourself, you are considered retired. For 2025, these monthly limits are:
- $1,950 if you’re under full retirement age for all of 2025
- $5,180 if you’ll reach full retirement age in 2025
“Substantial services” for self-employed people means working more than 45 hours a month or between 15 and 45 hours in a highly skilled job.
Will You Have to Pay Back Benefits?
If you decide to return to work within 12 months of first applying for Social Security benefits and you’re under 70, you have an option to withdraw your application. This requires:
- Submitting a form to the Social Security Administration
- Paying back any benefits you’ve already received, including amounts that were withheld
- You can then reapply for benefits later, potentially at a higher amount
If you plan to work for a long time and want to increase your final benefit amount, this strategy might make sense.
Your Benefits Can Actually Increase
Here’s something many people don’t realize: continuing to work while receiving Social Security can actually increase your benefits over time.
As long as you work, you’ll continue paying Social Security taxes on your earnings. Each year, Social Security automatically reviews your record to see if your additional earnings will increase your monthly benefit. If there’s an increase, they’ll send you a letter with your new benefit amount.
Also, any benefits withheld while you’re working aren’t “lost.” Once you reach full retirement age, Social Security will recalculate your benefit amount to account for the months when benefits were withheld.
Other Financial Considerations When Returning to Work
Medicare Coverage
If you’re 65 or older and decide to return to work, your Medicare coverage might be affected:
- You’re automatically enrolled in Medicare Part A (hospital insurance) at 65, which is usually free.
- At 65, you’re also eligible for Part B (doctor and outpatient services) and Part D (prescription costs) if you’re receiving Social Security benefits.
- If you withdraw your Social Security application but want to keep Part B coverage, you’ll be billed directly for future premiums.
- For higher earners (above $106,000 in 2025), Medicare Part B premiums are higher than the standard $185 per month.
Tax Implications
Returning to work can change your tax situation:
- Your income determines how much of your Social Security benefits are taxable.
- If half of your yearly Social Security benefits plus your other income exceeds $25,000 for single filers or $32,000 for joint filers, some of your benefits will be taxable.
- At higher income levels (over $34,000 for individuals or $44,000 for joint filers), up to 85% of your benefits may be taxable.
I always recommend consulting with a tax professional before making any major decisions that could impact your tax situation.
401(k) and Retirement Account Strategies
If you go back to work, consider these retirement account strategies:
- If your new employer offers a 401(k), you may be able to delay required minimum distributions (RMDs) from that plan while you’re still working.
- You might be able to roll over old 401(k)s or IRAs into your new employer’s plan, potentially delaying RMDs on those funds as well.
- Check if your new employer offers matching contributions, which can help boost your retirement savings.
Pension Considerations
If you have a pension, check how returning to work might affect it:
- Every pension plan has different rules about working after retirement.
- Some plans reduce pension payments if you return to work, especially if you go back to work for the same employer.
- It’s worth contacting your pension administrator to understand the specific implications.
Reporting Changes to Social Security
If you decide to return to work while receiving benefits and you’re under full retirement age, it’s important to let Social Security know right away. You cannot report earnings changes online, so you’ll need to:
- Call them at 1-800-772-1213 (TTY 1-800-325-0778), Monday through Friday, 8:00 a.m. to 7:00 p.m., or
- Contact your local Social Security office
Providing accurate earnings estimates helps avoid unexpected repayments later.
Final Thoughts
Going back to work after starting Social Security benefits can be a smart move for many reasons – whether it’s for additional income, personal fulfillment, or social engagement. Understanding how it will affect your benefits will help you make the best decision for your situation.
Remember, the rules change once you reach your full retirement age, giving you more flexibility to work without penalty. And in some cases, continuing to work can actually increase your benefit amount over time.
Have you considered returning to work after starting Social Security? What factors are most important in your decision? I’d love to hear your thoughts in the comments below!
Know the special rule for retiring and then unretiring mid-year
Those who choose to return to work mid-year have a special rule applied to their earnings for one year — usually the first year of their retirement.
The SSA gives the following example: If someone retires around June but creates their own business around October, they’ll still receive full benefits for the months they’re considered fully retired — regardless of their total earnings for that year.
The special rule will pay you a full benefits check for any whole month you’re considered retired, under the following circumstances, according to the SSA:
- Be under full retirement age for all of 2025. If your monthly income is $1,950 or less and you didn’t do much work as a self-employed person, you are considered retired.
- Reach full retirement age in 2025. If your monthly income is $5,180 or less and you didn’t do much work as a self-employed person, you are considered retired.
The administration defines “substantial services in self-employment” as working more than 45 hours a month to a business, or between 15 and 45 hours to a business in a “highly skilled occupation. ”.
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Calendar Icon 15 Years of experience Brian Baker covers investing and retirement for Bankrate. He is a CFA Charterholder and previously worked in equity research at a buyside investment firm. Baker is passionate about helping people make sense of complicated financial topics so that they can better plan for their financial futures.
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Bankrate is always editorially independent. While we adhere to strict , this post may contain references to products from our partners. Heres an explanation for . Our is to ensure everything we publish is objective, accurate and trustworthy. Bankrate logo.
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our reporters and editors focus on the things that people care about most, like how to save for retirement, how to pick investments, and more. This way, you can feel good about planning for the future. Bankrate logo.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo
Will my Benefits be Reduced if I go Back to Work?
FAQ
What is one of the biggest mistakes people make regarding Social Security?
4 Social Security Mistakes That Could Derail Your RetirementNot knowing your Full Retirement Age (FRA) . Filing for benefits too early. Ignoring life expectancy in your decision. Overlooking the rules and flexibility of Social Security.
Will I lose my Social Security if I go back to work?
Going back to work doesn’t always mean you lose your Social Security benefits. But if you are younger than your full retirement age and make more than the annual limit, your benefits may be cut. Once you reach full retirement age, your earnings will no longer affect your benefit amount.
What is the 5 year rule for Social Security?
The recent work test for Social Security Disability Insurance (SSDI) says that you must have worked for at least five of the ten years before your disability started in order to be eligible for benefits. This is called the “five-year rule.” Work credits are used to decide this. You must have 20 credits within the last 10 years before your disability starts.
Are you allowed to work after you start collecting Social Security?
Should I go back to work after starting Social Security?
Here are the key things to keep in mind if you’re considering going back to work after starting Social Security: 1. Age and Earnings Limit: Full Retirement Age: If you are younger than your full retirement age, your Social Security benefits may be withheld or reduced if your earnings exceed the annual earnings limit.
Can you lose social security if you go back to work?
No, you won’t lose your Social Security benefits if you go back to work. However, your benefits may be reduced or withheld if you are younger than full retirement age and earn above the annual earnings limit. 2. Can I get my Social Security benefits back if they were withheld?
Will Social Security benefits be changed if I return to work?
Age is the biggest determining factor for how Social Security benefits would be altered if you return to work. Depending on where you fall in regards to “full retirement age,” benefits may be withheld or adjusted.
Will my Social Security benefits be withheld if I return to work?
If you’re below normal retirement age, not currently working and receiving Social Security benefits, the earnings test can help you determine if your benefits will be withheld if you return to the workforce.
Can I Keep my Social Security benefits if I work?
If you work, and are at full retirement age or older, you may keep all of your benefits, no matter how much you earn. If you’re younger than full retirement age, there is a limit to how much you can earn and still receive full Social Security benefits.
Will I get my social security back if I’m employed?
No, you’ll get it back, assuming you live long enough. Remember that any Social Security recipient who claims before full retirement age, employed or not, doesn’t get a full benefit. Instead, it’s lowered based on the number of months before full retirement age that the claim is made.