Social Security acts as a financial cushion for many older adults. That’s why it’s important to carefully consider how long you work and at what age you should start receiving your monthly checks so you can maximize benefits.
If you are age 65 and still working, it can be especially important to review all your options before you stop working — and potentially work for a few extra years. You’re still just short of full retirement age, and working beyond age 65 can make a significant difference for your finances. While you may be thinking of claiming at age 65 since that’s when you become eligible for Medicare, there are a few key details to consider.
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Age 65 is not full retirement age
The moment you turn 65, you become eligible for Medicare. While Medicare doesn’t cover all health-related expenses, it can be a good insurance policy when you are approaching retirement. However, that doesn’t necessarily mean you should also begin receiving Social Security benefits. Full retirement age is 67 for anyone born in 1960 or later, and claiming before full retirement age while working can result in withheld benefits.
Social Security will withhold a portion of your benefits if you earn above certain thresholds and are younger than 67. Delaying your benefit a little longer can prevent withholding, and delayed retirement credits can accumulate if you further delay Social Security. You can maximize your Social Security benefits by waiting to claim them until you turn 70.
Social Security has multiple benefit calculators you can use to estimate how much you will receive based on your lifelong earnings and when you plan to claim benefits. These calculators show the advantages of waiting a little longer, and doing so can also boost your lifetime earnings, especially if you have a strong salary at your current job. Higher lifetime earnings translate into higher Social Security benefits.
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Working while claiming can temporarily shrink your checks
If you would receive $2,000 per month from Social Security if you claim at 65, you won’t actually end up with $2,000 per month if you are still working. That’s because Social Security will withhold $1 in benefits for every $2 earned above a predetermined income limit if you are below your full retirement age.
That limit is $24,480 in 2026. Withheld benefits don’t just disappear; the Social Security Adminsitration recaluclates your future benefits to give you credits for the months your benefit was reduced.
The limit is more generous the year you reach full retirement age. Then, Social Security only withholds $1 for every $3 above a higher limit, which is $65,160 in 2026.
Medicare, taxes and cash flow should be part of the same decision
When you turn 65, you aren’t just deciding about Social Security. You become eligible for Medicare at that age, even if you are still employed and do not take out Social Security. Some workers can delay Medicare Part B without a penalty as long as they have qualifying employer coverage. However, if you do not qualify, you can face late enrollment penalties.
It’s also important to consider how taxes will impact your take-home pay if you claim Social Security. A high income will make more of your Social Security benefits eligible for taxation. Receiving immediate benefits may not be worth the long-term impact of losing out on cash flow growth, especially if you can sufficiently cover your living expenses.
Two other details to consider are spousal benefits and how long you plan to work. Spouses who are the higher earner may want to delay until 70 or as close to that number as possible. That’s because the surviving spouse benefit is based on the higher earner’s Social Security benefit. People who plan to work for a few more years after turning 65 are also incentivized to wait until 70 or as close to that age as possible.
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