09 Mar How much will Social Security go up if I work part-time?

Q. I retired two years ago and I started taking Social Security. I’m trying not to take much from my retirement accounts. How much can I expect my Social Security to go up if I go back to work part-time? I’m trying to decide if it’s worth it so I can give my investments more time to grow.
— Going back, maybe

A. Congratulations on your retirement.

We’re glad you’re looking at ways to make sure your money lasts for your lifetime.

First, it is important to note that if you are working while collecting Social Security, you would need to be at least your full retirement age (FRA), otherwise you would be subject to the earnings test, Michael Cocco, a certified financial planner with Beacon Wealth Partners in Nutley.

This is where your Social Security benefits may be reduced because of the amount of your earnings.

“For 2023, if you plan to earn more than $21,240 in this calendar year, and you were not yet at your full retirement age, your monthly benefit would be deducted by $1 for every $2 you earn above the annual income limit,” Cocco said. “In the year you reach full retirement age, your monthly benefit would be deducted by $1 in benefits for every $3 you earn above $56,520 for 2023, and earnings are only counted before the month you reach your full retirement age.”

Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings, he said.

If you continue to work, even if you are already collecting Social Security, your earnings would be subject to Social Security tax, so you would still be paying into the system, Cocco said.

“Social Security will automatically review your earnings records each year to see if your monthly benefit has an opportunity to increase,” he said. “Your Social Security retirement benefits are based on your highest 35 years of earnings, adjusted for inflation.”

You should start this analysis by creating a MySocialSecurity account at www.ssa.gov, if you haven’t already, so you can log in and view your personal earnings history, Cocco said.

You would then be able to see on a year-by-year basis if you “maxed out” by hitting the maximum Social Security income limit for that particular year, he said.

“If you maxed out your benefit for 35 years or more, working part-time will not change your benefits,” he said. “However, if you worked and paid into the Social Security system for less than 35 years, then, yes, working part-time would help increase your benefits by replacing a year where you earned $0, thus improving your overall average earnings.”

If you have paid towards Social Security in some years, but did not max out, it would depend on how much you earn part-time this year and how it relates to a year in the past where you only earned minimal income, to see if that would be enough to move the needle and increase your benefit, he said.

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This story was originally published on March 9, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.