Working after starting Social Security at 70 - will my SS benefits be reduced?
I finally pulled the trigger and started my Social Security retirement at age 70 back in January (thought I'd wait for the maximum benefit). I've been enjoying retirement but honestly getting a bit bored, and now a former client wants me to come back as a part-time consultant. The pay would be around $3,000/month, which would be nice extra income. I'm confused about whether this will affect my Social Security payment. I thought once you reach 70, you can earn as much as you want without any reduction in benefits? But my neighbor swears his benefits got cut when he went back to work at 72. The SSA website is confusing me and I can't get through on the phone. Can someone clarify if working after 70 reduces your Social Security payments? Will I have to pay more taxes? The whole reason I waited until 70 was to maximize my monthly check, so I'd hate to mess that up now.
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Amina Toure
Good news! Once you've reached your Full Retirement Age (FRA), which is between 66-67 depending on your birth year, the earnings test no longer applies. Since you're 70, you can earn as much as you want from working without any reduction to your Social Security benefits. Your neighbor is mistaken or might be confused about something else affecting his benefits. What might happen is that more of your Social Security becomes taxable if your combined income goes above certain thresholds. Up to 85% of your benefits could be subject to income tax depending on your total income. So while your actual SS payment won't be reduced, you might pay more in taxes on those benefits. This is probably what happened to your neighbor - not a reduction in benefits but an increase in taxes.
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Paolo Esposito
AuthorThank you so much for clarifying! That makes me feel better. Do you know what the income threshold is for when Social Security benefits become taxable? I'm trying to figure out if this consulting work will push me into paying taxes on my benefits.
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Oliver Weber
i went thru this last yr. retired at 68 started SS then got bored lol. got a part time job at lowes and my check didnt change AT ALL. your neighbor is wrong. BUT you will probably pay more taxes so watch out for that part.
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Paolo Esposito
AuthorThat's reassuring to hear from someone who's been in the same situation. Did you have to report anything to Social Security when you started working, or did you just file the extra income on your taxes?
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FireflyDreams
The SSA doesn't reduce benefits after FRA no matter how much you earn. But the IRS will tax your benefits if your combined income exceeds certain levels: - If you file individual and combined income is $25k-$34k, up to 50% of benefits may be taxable - If combined income exceeds $34k, up to 85% of benefits may be taxable - For joint filers, the thresholds are $32k-$44k for 50% taxation and over $44k for 85% taxation Combined income = Adjusted Gross Income + Nontaxable Interest + 1/2 of SS Benefits The extra $36k annually from your consulting will definitely impact your tax situation. Consider quarterly estimated tax payments to avoid a surprise tax bill.
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Paolo Esposito
AuthorThank you for those specific numbers! That's exactly what I needed to know. With my pension and the consulting work, I'll definitely be in the higher tax bracket. I should probably talk to my accountant about those quarterly payments you mentioned.
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Natasha Kuznetsova
THE SSA WILL ABSOLUTELY REDUCE YOUR BENEFITS!! Don't listen to these people! My brother-in-law lost $400 a month when he went back to work last year and he was 71!!! The government LIES about this stuff all the time. They SAY there's no earnings limit after FRA but then they find OTHER ways to cut your check!!! Call them and demand answers before you take that job!!!
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Amina Toure
I understand your frustration, but there must be something else going on with your brother-in-law's situation. By law, the SSA cannot reduce benefits due to earnings once you've reached FRA. He might have experienced a benefit adjustment for other reasons - perhaps an overpayment being recovered, Medicare premium increases, or tax withholding changes. It would be worth him calling to get clarification on exactly why his payment decreased.
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Javier Morales
I've been working part-time since I started collecting at 68 (I'm 73 now) and can confirm your benefits won't be reduced. However, I had a nightmare trying to get through to SSA when I had questions about my taxes. Spent 3 weeks calling multiple times a day only to get disconnected. Finally used a service called Claimyr (claimyr.com) that got me connected to a live agent in about 20 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU Saved me hours of frustration, and the agent confirmed that working doesn't reduce benefits after FRA but explained exactly how the taxation works based on my specific situation.
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Paolo Esposito
AuthorThanks for the tip! I've been trying to get through to SSA for days with no luck. I'll check out that service - at this point I just need to talk to someone who can explain exactly how this will affect my specific situation.
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Emma Anderson
Wait working affects your benefits?! I've been collecting Social Security for 3 years (I'm 68) and working part time at Walmart. Nobody told me this could be a problem! Did I mess something up??
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FireflyDreams
You're fine! As several people have explained in this thread, once you've reached your Full Retirement Age (which you have at 68), you can earn unlimited income without any reduction to your Social Security benefits. The only impact might be that more of your benefits become subject to income tax depending on your total combined income.
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Malik Thompson
This is exactly why i waited til 70 to claim! You get the max benefit PLUS you can work with no penalties. My financial advisor calls it the "win-win" strategy. The only downside is taxes but thats gonna happen no matter what once your income gets high enough. Youre doing the right thing - make that money!
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Paolo Esposito
AuthorThanks! That makes me feel better about my decision. I guess paying some extra tax is still better than leaving money on the table if I can still work and earn.
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Oliver Weber
just curious y did ur neighbor think his benefits got cut? maybe he had something else happen like medicare costs going up or something?
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Paolo Esposito
AuthorYou know, I'm not sure. Next time I see him I'll ask for more details. It's possible he's confusing a tax issue or Medicare premium increase with an actual reduction in his SS payment. Or maybe there was some kind of overpayment they were correcting? Clearly I need to educate myself more on this stuff!
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Luca Ferrari
As someone who's been through this exact situation, I can confirm what others have said - your Social Security benefits absolutely will NOT be reduced for working after age 70. I started collecting at 70 last year and went back to part-time work about 6 months later. My monthly SS payment has remained exactly the same. The key thing to understand is that there are two separate issues: 1) benefit reduction (which doesn't happen after FRA) and 2) taxation of benefits (which can increase based on your total income). Your neighbor likely experienced #2 - more of his benefits became taxable, which means less take-home money even though his actual SS payment didn't change. I'd strongly recommend keeping good records of your consulting income and setting aside money for taxes quarterly. The extra $36k annually will definitely push you into having a larger portion of your SS benefits taxed. But your actual monthly Social Security payment will stay the same - that's guaranteed by law once you've reached FRA. Go ahead and take that consulting job! You waited until 70 for maximum benefits, and now you get to enjoy both the full payment AND additional income without penalties.
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