Working in Retirement? Here's the Surprising Impact on Your Social Security Check -- for Better and Worse.

Although some people see retirement as a time to stop working, you may continue to hold down a job as a retiree for extra money, boredom relief, or a combination of both. But earning a paycheck could have a surprising effect on your monthly Social Security checks -- and not necessarily a negative one.

Whether working boosts your benefits or reduces them, though, depends on your age and total wages. Here's what you need to know if you intend to hold down a job while receiving Social Security or are already doing so.

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When working hurts your Social Security benefits

If you claim Social Security before reaching full retirement age and continue to work, you'll be subject to an earnings test. The limits of the earnings test change every year. But exceeding them could result in benefits being temporarily withheld.

This year, for example, you'll have $1 in Social Security withheld per $2 of income above $24,480 if you will not reach full retirement age by Dec. 31. If you will reach full retirement age this year, you'll have $1 in Social Security withheld per $3 of earnings above $65,160.

But withheld benefits are not lost forever. Once full retirement age arrives, the Social Security Administration should recalculate your monthly payments and return that withheld money to you in the form of larger benefits.

In the near term, though, your checks could be smaller. So you'll need to make sure your budget can handle that.

When working increases your Social Security benefits

You may not realize it, but continuing to work could actually lead to more Social Security in the long run. Social Security's benefits formula takes your 35 highest-paid years of income into account. But if you're earning a nice amount of money while collecting Social Security, you can potentially replace a lower-income year with higher wages, leading to larger monthly checks.

And to be clear, this adjustment can happen even if you're already getting benefits.

Make sure you know the rules

Working during retirement doesn't automatically hurt your Social Security benefits. If you claim benefits before full retirement age, earning too much could temporarily reduce your monthly checks because of the earnings test. But after full retirement age, there are fewer consequences and a lot of potential upside.

Either way it's important to understand the rules of working while on Social Security. That way, you can avoid unwanted surprises and also know what positive impact your effort might yield.

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