2 Advantages and 2 Drawbacks of Working While Claiming Social Security

You've probably thought carefully about when you want to sign up for Social Security, but you might not have thought as much about whether you should apply while you're still working. It's a decision that deserves some real consideration.

Claiming Social Security while you're working has some upsides, but it can have drawbacks, too. Here are two advantages and two disadvantages to consider before deciding whether it's right for you.

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Two advantages of working and claiming Social Security at the same time

There are two main ways that working and claiming Social Security simultaneously can pay off for you:

1. It could increase your future benefits

Working more today could boost your future checks if you're earning more from your job now than you did in years past. The Social Security Administration automatically reviews your earnings history each year, and if your 35 highest-earning years have changed, this could increase your benefit amount, leading to a boost beyond the annual cost-of-living adjustment (COLA).

2. It could increase your standard of living today

Working while claiming Social Security could increase your monthly income, allowing you to live more comfortably than you could on either your Social Security benefits or income from your job alone. But it doesn't always work out this way.

Two disadvantages of working while claiming Social Security

Not everyone encounters these drawbacks, but if you think you might, you may want to hold off on applying for benefits:

1. You could lose some of your checks to the earnings test

Earning too much from your job could cause you to lose some money to the Social Security earnings test. But this only applies if you're under your full retirement age (FRA) at the time.

In some cases, this can cost you entire months of benefit checks, though the loss is short-term. Once you reach your FRA, any money withheld due to the earnings test comes back as a permanent benefit boost.

2. You could increase your odds of owing Social Security benefit taxes

Income from your job counts toward your provisional income, which the government uses to determine whether you owe taxes on up to 85% of your Social Security benefits. If you earn too much from your job, you may have to give a portion of your benefits back to the government at tax time.

If either of these things concerns you, consider waiting to apply for Social Security until you're ready to leave your job. This will help you avoid the earnings test and keep your taxes manageable in the meantime.

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