2 Things Could Happen to Your Social Security if You Keep Working After Retirement

If you plan to collect Social Security and keep working at the same time, you need to know that your decision could affect your benefits.

In fact, it could affect them in two different ways: It could increase your monthly checks, or cause them to temporarily decline or even disappear entirely.

Here's what you need to know about the impact of working while getting retirement benefits at the same time.

Image source: Getty Images.

1. You could forfeit some of your monthly Social Security income

The first thing you must know if you're considering working while collecting benefits is that your decision could end up causing your checks to decline or disappear entirely. This can happen if you're working before your full retirement age.

FRA is 67 for anyone born in 1960 or later. Working before FRA will result in benefits being reduced once your income exceeds a certain level. Specifically in 2026:

• If you earn more than $24,480 and won't reach your FRA all year, your Social Security benefit will be reduced by $1 for every extra $2 above this amount.
• If you earn more than $65,160 and will reach your FRA at some point during the year but haven't reached it yet, you will reduce your benefit by $1 for every $3 above that amount. You're allowed to earn as much as you want with no benefit reduction after hitting FRA.

The bad news is, you can't generate a lot of income from work and get Social Security at the same time, so if you were hoping to collect from both sources, that will be a problem.

The good news is, your future benefits will increase if you forfeit benefits now because you work too much. Your benefit is recalculated at full retirement age to account for missed checks.

A larger future benefit is a good thing, as it means you'll have to rely less on your retirement plans to produce income in the future.

2. You could increase your monthly checks

On the flip side, it's also possible that working could increase your monthly checks. This can happen because your benefit equals a percentage of average wages in your highest 35 years of earnings.

If you work while collecting Social Security and you make more money than you did at some earlier points in your career, your current high-earning years could potentially replace some earlier lower-earning years in your benefits formula. This could increase the average wages that benefits are based on, resulting in larger future checks.

If you're earning a lot of money later in your career, continuing to work could pay off big time -- even if it does mean temporarily giving up some Social Security if you haven't reached full retirement age yet.

So think carefully about whether leaving the workforce is a good idea or whether continuing to bring in paychecks for a few more years is worth it to make your retirement more secure.

The Motley Fool has a disclosure policy.