16 Dec Are you allowed to take Social Security while still working?

Q. Are you allowed to take Social Security while still working in New Jersey? My brother-in-law was saying that it would put us in possibly a higher tax bracket and that it would be taxed.
— Confused

A. It depends on the specifics.

Working can affect taxes when you’re receiving benefits.

Social Security calculates benefits from the top 35 years of your work history, said Jody D’Agostini, a certified financial planner with Equitable Advisors/The Falcon Financial Group in Morristown.

First, know that New Jersey does not tax Social Security benefits. The federal government is a different story.

You can take Social Security benefits if you’re still working, but some of your benefits may be taxed, she said.

“If you earn between $25,000 and $34,000 you will be taxed on up to 50% of your Social Security benefit,” she said. “If you earn more than $34,000, you will be taxed on up to 85% of your benefit.”

In addition, she said, if you are still working at an age that’s younger than your full retirement benefit age, you will lose $1 for every $2 that you earn above $19,560.

Then in the year that you reach full retirement age, $1 in benefits for every $3 you earn will be deducted. The limit for this is $51,960 without losing benefits, she said.

“If you are the higher wage earner in a couple, then you should try to maximize this benefit as much as possible,” she said. “Were to predecease your spouse, he or she would step up and continue the higher benefit until their death.”

There are many reasons to delay collecting, D’Agostini said, starting with the fact that you will receive a permanently reduced benefit for collecting before your full retirement age.

“If you delay claiming from your full retirement age until age 70, you will receive an additional 8% per year added to your benefit,” she said. “This is often the best `pension’ that a retiree has as it is backed by the U.S. government.”

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This story was originally published on Dec. 16, 2022.

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