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JUNE 13, 2022

Can I still work if I'm claiming Social Security benefits?

Answered by
Ben Storey
Director, Retirement Research & Insights, Bank of America
Yes, you can collect Social Security benefits and work in retirement at the same time. But if you're working and collecting benefits before you've reached full retirement age — which is between ages 66 and 67, depending on the year of your birth — your monthly benefits may be subject to a reduction if your income exceeds a prescribed limit.
However, when you reach full retirement age, your Social Security benefit will be adjusted to give you credit for the withholding that took place due to withholding resulting from income that exceeds the annual Social Security earnings limit. After you reach full retirement age, your benefits also will no longer be subject to any reduction while you're employed, and there's no limit on how much you can earn.
The Social Security Administration uses a formula based on an annual earnings limit and your age to calculate the Social Security benefits you will receive while you're still working. While it's best to discuss your situation with an advisor or accountant, the Social Security website includes a Social Security Administration calculator for you to model how your earnings could affect your benefit payments.

Will my Social Security benefits be taxed differently if I work?

Working while collecting Social Security can affect your taxable income. Taxes on Social Security retirement benefits are based on what is commonly referred to as your combined income, a figure the IRS calculates by adding up your adjusted gross income, any tax-free interest you may have earned, and 50% of your Social Security benefits, plus certain other adjustments for the year. There are strategies that can help you minimize taxes on your Social Security benefits, although, these too can change based on your age.
Calculating your combined income
Your adjusted gross income
Any tax-exempt interest (generally including interest from municipal bonds — often a core component of retirement portfolios)
50% of your Social Security benefits, plus certain other adjustments for the year
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This material should be regarded as educational information on Social Security considerations and is not intended to provide specific advice. If you have questions regarding your particular situation, you should contact the Social Security Administration and/or your legal advisors.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
You have choices about what to do with your employer-sponsored retirement plan accounts. Depending on your financial circumstances, needs and goals, you may choose to roll over to an IRA or convert to a Roth IRA, roll over an employer-sponsored plan from your old job to your new employer, take a distribution, or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment (particularly with reference to employer stock), and different types of protection from creditors and legal judgments. These are complex choices and should be considered with care. For more information visit our rollover page or call Merrill at 888.637.3343.
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