Will My Social Security Payment Increase if I Keep Working After I Start Receiving Benefits?

You can increase your Social Security benefit payments even if you elect to start collecting while still working.

Introduction

The notion that you will work and save for most of your life, then retire and live off your Social Security and savings is more a distant ideal and less a reality in today’s day and age.

The actual reality is that more people are continuing to work to an advanced age, and they are collecting their Social Security benefits while still working.

According to a 2025 Social Security Administration (SSA) Fact Sheet, nearly 90-percent of Americans age 65 and older were receiving benefits. Combined with a U.S. Bureau of Labor Statistics (BLS) Employment Projections Report (2023), which found that more than a quarter of Americans aged 65 to 74 were still working, it’s clear that many people in this country both work and collect Social Security at the same time.

Safe to say the changing nature of retirement is presenting new challenges. And with those challenges come new questions for people in or approaching the 2nd stage of their life. Not surprisingly, a big concern for many that find themselves still working while collecting their benefits is the impact this will have on their future payments.

Today we examine the question of whether you can increase your benefit payment if you are in the position of working even after starting to collect Social Security.

Working and collecting Social Security

Before addressing the question relating to continuing to work after turning your benefits on, it’s probably best to examine some of the reasons why people are working more years in general.

• Longevity has increased in recent decades, so the reality of living longer in retirement increases the chances we might outlive our savings, which is a major concern for retirees
• Maintaining the standard of living they’ve established for themselves
• To reduce the number of years they will have to rely on savings in retirement (each year worked offsets the need to start dipping into savings for another year)
• Remaining connected with a group of people (coworkers/friends) whom they’ve worked and associated with
• Remaining active to maintain physical health
• Social reasons, such as having purpose, interacting with other people on a regular basis, to feel needed, and to maintain their general mental health
• And more

Fact is there are a lot of people in this boat today. So, if you find yourself contemplating working after starting your Social Security, or are already steadily employed while collecting your benefit check each month, you have plenty of company.

Which brings us back to the question of whether you can increase your benefits if you are already collecting and still working. The short answer is yes.

But to fully answer the question, we need to first cover some of the basics of Social Security. To assist with that, let’s look at some key terms and factors you’ll need to know in order to understand how your benefits are calculated.

Key terms and factors

Minimum Eligibility Age: Age 62, which is the age at which you can start to receive a reduced portion of your full SS benefits. Benefits started at this age are permanently reduced.

Full Retirement Age (FRA): This is the age at which the SSA views you as eligible for full retirement benefits. It is based on your age when you apply for SS and the year in which you were born (view SSA table). For example, if you were born 1943 to 1954, your FRA is age 66. It scales up from there. If you were born in or after 1960, your FRA is age 67.

Delayed Retirement: If you elect to delay receipt of your eligible monthly benefit after FRA, you will receive delayed retirement credits (each month of delay) and your PIA will increase. This adds up to 8-percent per year. You can do so up to age 70, at which point you can no longer delay. Were you to start Social Security at age 70, you would be eligible for a benefit that is 124-percent that of what you would receive at FRA.

Earnings Record: A compilation of your annual taxable income over your lifetime, broken out by year.

Credits: These are the units used by the SSA to determine if an individual has qualified (eligible) for benefits. Also referred to as “quarters of coverage,” you earn credits by working and paying Social Security taxes, with a maximum of four credits earned per year. The SSA requires potential recipients to have accumulated 40 credits (requiring 10 years of work) to qualify for both Social Security benefits and Medicare.

Average Indexed Monthly Earnings (AIME): Your annual earnings (taxable income – adjusted for inflation) are indexed, using the highest-earning 35 years from your lifetime. The indexed earnings are averaged and then divided by 12 to ascertain the AIME figure.

Primary Insurance Amount (PIA): This is the monthly benefit amount an individual is entitled to if they start drawing Social Security at their FRA.

Cost of Living Adjustment (COLA): This is a cost-of-living adjustment made annually by the SSA to adjust benefits for inflation, theoretically maintaining the purchasing power of recipients. This adjustment is mandated based on the Department of Labor’s Consumer Price Index (CPI). For 2025 COLA is 2.5-percent.

Retirement Earnings Test (RET): This is an earnings limit set by the SSA for people collecting benefits while still working who have not reached FRA. The SSA temporarily withholds or eliminates your benefits to ensure you don’t receive full retirement benefits while also earning wages.

If you do not reach FRA for the full year after starting benefits, the income limit is $23,400 for 2025, according to the SSA. If your income (earned wages or self-employed income, not from other sources) exceeds that threshold, the SSA will deduct $1 from the benefit payment for every $2 you earn above the limit.

If you reach your FRA in 2025, the income limit is $62,160 between January and your birthday month. They will deduct $1 for every $3 you earn above the limit, up until your birth month. Thereafter, they won’t withhold any portion of your Social Security benefits.

An important note is the fact you won’t lose those benefits withheld. Your benefits are recalculated and increased at FRA to account for the previously withheld amount.

How your benefits are calculated

Now we can take a look at how the SSA calculates your benefits. The amount of SS you will be eligible for at FRA (PIA) is derived by applying a formular to your AIME. For 2025 they apply bend points (90-percent, 32-percent and 15-percent, respectively) to your AIME.

• 90-percent of the first $1,226 of AIME, plus
• 32-percent of AIME over $1,226 and through $7,391, plus
• 15-percent of AIME over $7,391

The result of the calculation is the benefit amount or PIA you are entitled to when you reach FRA. You can view your PIA at the Social Security Statement page. (Note – there is an added step in the calculation which is not included here which can be very confusing – view here)

According to the SSA, the average monthly Social Security check in 2025 for all retired workers is $1,980.86, although Newsweek just reported this past April that the average is now $1,999.97. By mid-year that figure is expected to break above $2,000 for the first time in the program’s history.

Early retirement and your benefit

We’ve mentioned eligibility starting at age 62, but it’s important to understand how taking early retirement will affect your lifetime payout if you do go that route, regardless of whether you continue to work or not.

To best illustrate the discounting of benefits associated with electing early retirement, let’s look at the SSA chart on primary and spousal benefits at age 62:

As demonstrated in the chart, if you were to start collecting at age 62 and were born in 1960, your benefit would be permanently reduced by 30-percent compared to what you would be due if you waited till FRA to start. The spousal benefit reduction in the same scenario would be 35-percent.

The reduction is decreased a small percentage with each month that passes, right up to reaching your FRA. The important issue to take note of is the fact the reduction is permanent once the benefit is started.

That said, you can elect to reverse your early retirement decision as long as you do so within 12 months of starting your benefits. But, you will have to repay everything you received up to that time, including Medicare premiums. Thereafter, you can restart your Social Security at a later date and at a higher percentage up to age 70, when benefits are automatically restarted by the SSA.

Bolstering your AIME

While delaying the start of your benefits until you reach FRA will have the biggest impact when it comes to increasing your Social Security payments in retirement (more if you do so up to age 70), there is another consideration worth noting if you plan to continue working.

As previously mentioned, your AIME is based on your earnings, taking into account the highest-earning 35-years from your lifetime. Even if you elected to start your benefits while still working, your newer earnings can be used to replace lower-earning years from earlier in your record. You might even have some years where you had no taxable income, in which case zeros are added to complete your AIME computation.

Those zeros and lower-earning years reduce your AIME, and in turn your monthly SS payments. Each  year you do work will allow you to replace a zero or low-earning year in your Social Security calculation, which could help to increase your benefit amount.

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Taxes

Death and taxes – life’s realities. The IRS is always going to get their fair share and that’s no different when it comes to your benefits. Many people make the wrong assumption that their Social Security benefits are not taxable. Simply not true, at least for now.

So, while you’ve decided you need to keep working even after having started your benefits, and hope to maximize the amount of SS you will receive going forward, there is still a good chance a portion of your benefit check may be reduced by the tax man.

The IRS looks at what is called your combined income. This equates to your adjusted gross income (AGI), plus nontaxable interest, plus half of your Social Security benefits.

Here is how it works:

• If you file as an individual and your combined income is less than $25,000, you’ll owe no tax on your SS benefits
• If single and your combined income is $25,000 – $34,000, you may have to pay income tax on up to 50-percent of your Social Security benefits
• If you file as an individual and your combined income is more than $34,000, you may have to pay income tax on up to 85-percent of your Social Security benefits
• If you file a joint return and your combined income is less than $32,000, you’ll owe no tax on your SS benefits
• If married and your combined income is between $32,000 – $44,000, you may have to pay income tax on up to 50-percent of your Social Security benefits
• If you file a joint return and your combined income is more than $44,000, you may have to pay income tax on up to 85-percent of your Social Security benefit

Conclusion

Today’s retirement landscape isn’t that of your parents. For many Americans, grinding it out in a 9-to-5 routine remains the reality versus riding off into the sunset. For some that is by design and for others it is a necessity.

There are in fact many good reasons to continue working, some of which we already covered. But, if you elect (or are forced) to do so, there are issues you should be aware of and need to factor when it comes to your retirement. Especially when it comes to your retirement planning.

What you’ll receive in Social Security, how long you’ll continue to bring in a paycheck, the number of years you’re likely to live, maintaining your lifestyle, et cetera. And there are myriad issues beyond these that you need to think about to ensure a secure future for you and your family.

Let’s face it, retirement can be complicated and navigating it successfully is no easy task. A wrong assumption here or a false move there can come with serious, lasting consequences. And at time when it can be difficult, if not impossible, to deal with and recover from.

It’s imperative that you have a clear understanding of how Social Security works and what to expect. At Oak Harvest we can be help to ensure you are properly informed and prepared regarding your Social Security. As well as all the other complicated issues surrounding retirement, such as income, spending down your assets, reducing your taxes, setting goals, and more.

We can look at your current retirement plan to determine if it can realistically meet your needs and goals. Or we can assist you by creating a retirement plan capable of helping you do so. We can build a holistic, comprehensive retirement plan addressing relevant issues, utilizing strategies that cover your Social Security, taxes, income, spending, healthcare, legacy, and more, customized to your family’s specific needs.

A plan created with the goal of helping you achieve the retirement you and your spouse envision.

If you’re ready to take the next step and talk to a team of financial advisors and retirement planners who can advise on all your retirement needs, contact us today to learn more about your retirement planning options.

 

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