What Happens if You Work After Reaching Full Retirement Age?
Key Points
Working past full retirement age allows you more time to contribute to your retirement fund.
Spending more time on the job can help offset the impact inflation has on your budget.
Working past full retirement age appears to offer both mental and physical benefits.
- The $23,760 Social Security bonus most retirees completely overlook ›
An estimated 55% of Americans don't feel prepared for retirement. That may be one of the reasons so many older individuals have chosen to remain in the workforce. Whether they work for someone else or run their own business, staying on the job longer has its perks.
For most Americans, full retirement age (FRA) is around 67, and that's the point at which you've earned full Social Security benefits. As long as you still have the physical, mental, and emotional stamina to stay on the job, here are some of the advantages of working beyond your FRA.
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No earnings limit
The earliest you can claim Social Security benefits is age 62. While it works out for many people, it's important to remember that making a claim that early permanently reduces your monthly benefits by 30%.
In addition, if you continue to work between 62 and FRA, there's a limit on how much you can earn before the Social Security Administration (SSA) begins withholding part of your Social Security checks. While you'll get that money back once you reach FRA, not having access to it when it's earned can be a hassle.
Continuing to work once you've reached FRA means you can earn as much as you'd like without anything being withheld from your checks.
Additional benefits
Consider just a few of the benefits associated with working past FRA:
- You have extra income to help offset inflation's impact on your budget.
- Whether you work for a company that offers an employer-sponsored retirement plan or you're self-employed and have a solo 401(k), remaining on the job gives you more time to build your retirement account.
- There's increasing evidence that working past FRA can help you maintain better health and even live longer. A 2016 study found that working even one year beyond retirement age is associated with a 9% to 11% lower risk of dying during the 18-year study.
Time to reconsider
Let's say you're 67 and claim Social Security. As you continue to work, you realize that you could get by without your Social Security benefits. As long as it's been less than 12 months since you became eligible to claim them, you can request that the SSA suspend your benefits until a later time.
While you'll have to pay back the money you've received up to that point, it may be worth it for you. That's because once your benefits stop, you start earning delayed retirement credits. When benefits automatically restart at age 70 (or earlier, if you decide to restart them), you'll find yourself with a monthly Social Security check that's higher than the one you received at age 67. In fact, if you wait until age 70, your benefits will be roughly 24% higher.
Not everyone wants to work past FRA, but if remaining in the workforce sounds good to you, it's nice to recognize the ways it can be beneficial.
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