Ask Larry: When Can I Start Working And Still Keep My Social Security?

Today’s Social Security column addresses questions about how the earnings test affects Social Security benefits while working, whether benefits automatically switch to retirement benefits at 70 after a restricted application and whether a worker’s disability benefit affects survivor’s benefits claimed on their record. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.

When Can I Start Working And Still Keep My Social Security?

Hi Larry, I am 65 and retired. When can I start working and keep my Social Security retirement benefit without incurring any penalty? Thanks, Tomás

Hi Tomás, Depending on how much you earn, you might be able to work and collect benefits now. In 2021, people under full retirement age (FRA) can earn up to $18,960 without losing any benefits but they lose $1 of benefits for each $2 that they earn in excess of that amount.

The exempt amount is higher (i.e. $50,520) for people who will reach FRA prior to the end of the year, and only amounts earned prior to the month in which a person reaches FRA count toward that limit. Furthermore, for people reaching FRA before the end of the year, $1 of benefits is withheld for each $3 of their excess earnings.

If you’re asking when you can earn an unlimited amount and still collect benefits, that happens starting with the month you reach FRA. FRA dates are different depending on a person’s year of birth.

You may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to fully analyze your options so you can make informed decisions about your best strategy for maximizing your benefits and avoid unknowingly leaving money on the table. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

Will I Automatically Switch To My Retirement Benefit When I Reach 70?

Hi Larry, I have been receiving my Social Security divorced spousal benefits. I will be 70 soon. Will Social Security automatically switch me to my Social Security retirement benefit or do I need to file a document to make this happen? Thanks, Cynthia

Hi Cynthia, I assume you mean that you were born prior to 1/2/1954 and you filed a restricted application for divorced spousal benefits only when you reached full retirement age (FRA). If so, you’ll need to file a full application for Social Security retirement benefits in order to switch to your own account.

When a person files a restricted application for spousal or divorced spousal benefits only, they must specifically restrict their own benefits from the scope of their application. That would mean that you haven’t yet applied for your retirement benefits, so you’ll need file an application when you want to start receiving your retirement benefits. Best, Larry

Will The Fact That My Husband Drew Disability Benefits Affect My Survivor Benefits?

Hi Larry, My husband was receiving Social Security disability for six years before his death at 64 with a benefit of $2,480 per month. I am 58 and understand I cannot get survivor benefits until 60 and then at a reduced rate but I will probably begin them at 60. Will his being on disability affect my survivor benefits?

Also will his benefit amount increase after his death as I have another 16 months after his death before I can claim his benefits. Is there a better strategy you can see for my situation? I have a work history but no where near his benefit. Thanks, Tracy

Hi Tracy, I’m sorry for your loss. The fact that your husband collected Social Security disability (SSDI) benefits prior to his death won’t adversely affect your widow’s rate at all.

It sounds like your unreduced widow’s rate would be equal to your husband’s full rate, including all cost of living (COLA) increases occurring after his death. But to get an unreduced widow’s rate, you’d have to wait until your full retirement age (FRA) to start drawing the widow’s benefits.

So in other words, if you don’t start drawing widow’s benefit until FRA it sounds like you’d qualify for the full amount that your husband would have been receiving if he was still alive when you start drawing. If you start drawing your widow’s benefits when you turn 60 instead, your rate will be reduced for age by 28.5%.

And that reduction will be permanent unless any of your benefits are withheld because you work and earn too much to be able to collect all of your benefits. The only way that you could qualify for widow’s benefits before age 60 is if you’re disabled.

If your own Social Security retirement benefit rate would be substantially less than your widow’s rate, your optimal strategy might be to draw your own benefit from 62 until FRA and then file for unreduced widow’s benefits starting at FRA.

My company’s software can show what your benefit rates would be if you file for them at different times. Other calculators can help as well as long as they’re very carefully engineered and account for all the same details. Best, Larry