I want to go back to work. Will Social Security take it all back?

The question

An illustrative letter.

The answer

My dear, how wonderful that retirement has left you restless rather than resting. A garden center sounds like good work for a man who loves to keep busy. Your neighbor means well, but he has the rule only half right. Let me show you how it really works, with your own numbers.

What is the Social Security earnings test?

If you start benefits before your full retirement age and keep working, Social Security applies what it calls the retirement earnings test. For 2026, if you are under full retirement age for the whole year, it holds back $1 of benefits for every $2 you earn above $24,480. In the year you reach full retirement age, the rule eases to $1 for every $3 above $65,160, counting only the months before your birthday month. Once you reach full retirement age, there is no limit at all, and you can earn as much as you like.

How much would be held back on $30,000?

Let us work it through. You would earn $30,000, which is $5,520 above the $24,480 limit. Half of that, $2,760, would be withheld from your benefits over the year. Everything else would still be paid.

Social Security usually does this by holding back whole monthly payments early in the year until the amount is covered, then paying your full benefit for the remaining months. In its own example, a person whose benefit is $600 a month and who owes $800 in withholding gets no payment for January and February, then the full $600 from March onward. So you might see a couple of months without a check, followed by normal payments. Telling Social Security your expected earnings in advance helps it get the amount right.

Is the withheld money gone for good?

No, and this is the part your neighbor missed. When you reach full retirement age, Social Security recalculates your benefit to give you credit for the months when payments were held back. Your monthly check rises from then on, to make up for it over time. The money is delayed, not taken.

Your work can help in another way too. Social Security bases your benefit on your highest 35 years of earnings. If your garden center wages are higher than one of your earlier years, your benefit can increase, and Social Security checks for this automatically each year.

Does my working affect anyone else's benefits?

It can. If a spouse, or anyone else, receives benefits based on your work record, your earnings above the limit can reduce the total family benefits paid on that record, not only your own check. If that applies to you, ask Social Security to show you the effect before you start.

How do I report what I earn?

Give Social Security your best estimate of the year's earnings when you start, and update it if your hours change. At the end of the year, your W-2 settles the accounts. Reporting early matters, because if too little is withheld during the year, Social Security will ask you to repay the overpayment later, which is far less pleasant than a planned pause in checks.

What about taxes on my benefits?

Working could make more of your benefits taxable. Up to 85 percent of Social Security benefits can be subject to federal income tax, depending on your combined income, which counts half your benefits plus your other income. A part-time paycheck could push you over those thresholds. A tax preparer can estimate the effect, and you can ask Social Security to withhold federal tax from your benefits so April holds no surprises.

Is there another option?

There is, if you started benefits recently. Social Security lets you withdraw your application within 12 months of your benefits being approved. You would have to repay everything you and your family received, including amounts withheld for Medicare premiums or taxes. In return, it is as if you never applied, and you could claim later for a larger monthly amount. You can withdraw only once, so it is a decision to make carefully, but it is worth knowing about.

What else should I weigh?

• Health coverage. At 63, you are not yet eligible for Medicare, which usually begins at 65. If the garden center offers health insurance, that alone could be worth thousands a year.
• Your retirement savings. If you have savings you are drawing on, a paycheck lets them rest and grow a little longer.
• Your spirit. Being bored silly has a cost too. Purpose and company are good for health, and that matters as much as any number.

Take the job, my dear, if it brings you joy. Tell Social Security what you expect to earn, set aside a little for taxes, and know that the money held back today will come home to you later.

One thing to do this week

Call Social Security or log in to your account, report the earnings you expect this year, and ask how withholding would be scheduled.