If You're Still Collecting a Paycheck, These 3 Social Security Rules Could Catch You Off Guard

No matter how well you've prepared for retirement and how much money you've managed to save, you may end up needing Social Security to cover a big chunk of your senior expenses. That's why it's important to claim benefits at the right time and make sure you understand the program's rules inside and out.

It's also important to understand how working later in life might impact your Social Security. In some regards, continuing to earn money could help you. But there could be negative consequences to think about, too.

Here are some Social Security rules to know if you're still working, and how a late-in-life paycheck could impact your retirement income on a whole.

Your wages may be subject to an earnings test

It's a big myth that people who collect Social Security are not allowed to also bring home a paycheck from a job. Once you reach full retirement age (FRA), you're allowed to earn as much money as you want without it having a negative impact on your benefits.

You can work while receiving Social Security prior to FRA, too. But in that case, you'll be subject to an earnings test.

Social Security's earnings test limits change each year. But exceeding those limits could result in having benefits withheld temporarily.

In 2026, Social Security's earnings test limit is $24,480 for people who will not reach FRA by the end of the year. For earnings above that threshold, $1 in Social Security is withheld per $2 of income.

The limit is higher this year if you're going to reach FRA by the end of 2026. In that case, benefits aren't withheld until your income exceeds $65,150. And then, $1 in Social Security is withheld per $3 of earnings.

You may be able to delay your claim

If you're still working in your 60s, you may have a prime opportunity to delay your Social Security claim. And that could lead to larger monthly checks.

Each year you delay Social Security past FRA gives your monthly benefits an 8% boost, up until you reach age 70. With an FRA of 67, you have an opportunity to grow your checks by 24%.

If you're still getting a regular paycheck, it may be more than feasible to wait on claiming Social Security. And even if it's only a part-time paycheck, between those wages and a more frugal lifestyle, you may be able to put your Social Security claim on hold a bit longer.

You might pay more for Medicare

Earning a paycheck doesn't guarantee that you'll pay more for Medicare. But the combination of wages from a job plus Social Security checks each month could increase your income to the point where you face surcharges on your Medicare premiums known as income-related monthly adjustment amounts, or IRMAAs.

IRMAAs are based on your income from two years prior. So if you're working this year and are earning a large salary, you could end up paying more for Medicare in two years. Or, if you're earning a more modest wage but also have Social Security, your income may be high enough for IRMAAs.

This year, the lowest IRMAA tier adds $81.20 per month to the cost of Medicare Part B. The highest tier adds $487 per month.

Another reason to potentially wait on Social Security if you're still working is that your salary plus benefits could result in higher Medicare costs. So you may want to hold off on Social Security until you're ready to stop working or reduce your hours.

Your wages might lead to larger benefits

You might think that once you reach a certain age, your wages won't count for Social Security purposes. But the Social Security Administration takes your 35 highest-paid years of income into account when calculating your monthly benefits.

If some of those highest years of earnings are in your 60s or even beyond, they should count toward your Social Security benefits. Along these lines, even if you're only working part-time, if those wages replace years of lower or no income, they could have a big impact on how much monthly Social Security you receive.

Bottom line

Social Security may end up being a big part of your retirement plan. So it's important to know the rules as they relate to working.

Your main takeaway should be that it's possible to collect a paycheck from a job while also getting Social Security benefits. But depending on your age, you may risk having benefits withheld if your earnings are higher. And your paycheck plus Social Security might cost you more in Medicare.

On the other hand, working later in life could lead to larger Social Security checks, whether due to boosted wages or the ability to delay your claim. So it's important to understand all of your options if you're willing and able to keep plugging away at a job.

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