How does part-time work affect Social Security payments?

Social Security retirement benefits are based on your earnings history. With the number of part-time workers increasing by two million people since this time two years ago, to more than 27 million people, the amount of people needing consider how this work will affect retirement is high.

If you work part-time for part of your career it is unlikely to count towards calculating your Social Security payments. This is because the amount of your benefit depends on your average earnings over your highest 35 years of work which part-time work is unlikely to reach.

It is possible to work part-time once you have retired but you need to be aware of its possible unintended effects.

Earning limits after retirement and benefits

If you are receiving Social Security benefits and you work part-time your earnings may affect the amount of your benefit payments.

The Social Security Administration (SSA) uses a formula to determine how much your benefit payments will be reduced based on your earnings from work, differing depending on the age of retirement.

If you are younger than your full retirement age, the Social Security Administration deducts $1 in benefits for each $2 you earn above the earnings limit. In 2023, the limit is $21,240.

In the year you reach your full retirement age, benefits are reduced by $1 for every $3 you earn above the earnings limit. In 2023, the limit is $56,520.

Starting with the month you reach full retirement age you can receive full benefits no matter how much money you earn, so there are no problems with special payments.

It’s important to note that not all types of income count towards the earnings limit. Income from pensions, annuities, investments, and rental property, for example, do not count towards the earnings limit. Only earned income from employment or self-employment counts towards the limit.