Working While Collecting Social Security Could Actually Cost You Benefits in 2 Ways

If you're worried about having enough money in retirement, working as a senior could seem like a good solution. After all, if you're still getting a paycheck, you won't have to rely as much on your savings and Social Security.

Unfortunately, there's an unexpected downside to bringing in income in your later years. Getting a paycheck could cost you Social Security benefits in two different ways, depending on your situation.

Here's how you could find yourself losing some of your Social Security money if you decide to keep earning after claiming benefits.

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1. Work limits could mean losing benefits

The first potential risk to your benefit comes from work limits set by the Social Security Administration. This applies only if you have not yet reached your full retirement age and you want to double dip and get both Social Security and income from a job.

If you haven't reached FRA and you work, the Social Security Administration begins withholding part of your benefits once your income exceeds a specific threshold. For 2026, this happens to you if:

• You won't reach FRA all year, and you earn more than $24,480. You lose $1 in benefits for every $2 above this limit.
• You'll reach FRA sometime during the year, and you earn more than $65,160. You lose $1 in benefits for every $3 above this limit.

The Social Security Administration will withhold whole checks once your income is high enough that you forfeit benefits. The good news is that the loss is temporary, as your benefits are recalculated at FRA to account for the income missed.

However, this does mean that if you were hoping for money from Social Security and a paycheck to avoid withdrawals from your retirement plans, you're going to have a problem.

2. The IRS could take a bigger cut

The second way you could lose Social Security benefits due to work is if your earnings end up pushing you above (or higher above) the threshold at which benefits become taxable. If you're a single tax filer with a provisional income above $25,000 or a married joint filer with a provisional income over $32,000, this becomes an issue for you.

Provisional income is half your Social Security, all of your taxable income, and some non-taxable income. If you're working and earning a lot, you're almost definitely going to see your income go above these limits and find yourself owing more money to the IRS. That's especially true as the threshold at which benefits are taxed is not indexed to inflation.

You need to be aware of these issues in your retirement planning process. Working while collecting Social Security may be your goal, but if you don't know about the ways you could lose some Social Security due to your paychecks, you could face an unpleasant surprise as a senior.

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