Your Options: Working, Applying for Retirement, or Both?

When it comes to working and claiming benefits, you have four choices, as illustrated in the following chart.

There is no “one-size-fits-all” answer that works for everyone. That’s why we encourage you to consider the four options below, which can help you make the best decision for you about work and retirement.

Please select options A, B, C, and D below to learn more about each scenario.

Continue Working Stop Working
Claim Benefits A B
Not Claim Benefits C D

A. You can continue working and claim your retirement benefits

If you claim benefits before your full retirement age, your benefits are reduced a fraction of a percent for each month before your full retirement age. If you also continue to work, your benefits will be reduced if you earn more than the yearly earnings limits. If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2018, that limit is $17,040. In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2018, the limit on your earnings is $45,360, but we only count earnings before the month you reach your full retirement age.

It is important to note that after you reach your full retirement age, we will recalculate your benefit amount. This recalculation will give you credit for any months in which you did not receive a benefit because of your earnings. We will send you a letter that explains any increase in your benefit amount. So, if some of your retirement benefits are withheld because of your earnings, your monthly benefit will likely increase at your full retirement age to take into account those months in which benefits were withheld. See our Retirement Planner for more information.

If you delay your benefits until after full retirement age, you may be eligible for delayed retirement credits that would increase your monthly benefit. If you also continue to work, you will be able to receive your full retirement benefits plus any increase to those benefits resulting from your additional earnings when we annually recalculate your benefits. The month you reach full retirement age or later, you can work and earn as much as you want.

If you claim retirement benefits at age 65 or earlier, you will be automatically enrolled in Medicare Part A and Part B the first day of the month you attain age 65. If you are still working beyond age 65 and have group health coverage through your employer, you might be able to postpone claiming Medicare until you stop working. Here is more information on Medicare.

B. You can stop working and claim your retirement benefits

If you stop working and claim benefits before your full retirement age, your benefits are reduced a fraction of a percent for each month before your full retirement age. Also, your benefits will not increase through additional earnings. If you delay your benefits until after full retirement age, you may be eligible for delayed retirement credits that would increase your benefit. Because we calculate your benefits based on your highest 35 years of earnings, if you stop working before you have attained 35 years of earnings there will be years of zero earnings used to calculate your benefit.

If you stop working and claim benefits before age 65, you will be automatically enrolled in Medicare Part A and Part B the first day of the month you attain age 65. If you are not receiving your Social Security benefits when you turn 65, you will not be automatically enrolled in Medicare Part A and Part B. You will need to apply for Medicare benefits three months before you turn 65. If you don’t sign up for Medicare Part B when you’re first eligible at age 65, you may have to pay a late enrollment penalty for as long as you have Medicare coverage.

C. You can continue working and not claim your retirement benefits

If you continue to work and do not claim your benefits until after full retirement age, your benefits will increase for each month you do not claim them until you reach age 70. There is no incentive to delay claiming after age 70. Continuing to work may also increase your benefits, because each year we automatically recalculate to see if your current earnings replace an earlier year of lower or zero earnings, which can result in a higher benefit amount.

If you are not receiving your Social Security benefits when you turn 65, you will not be automatically enrolled in Medicare Part A and Part B. You will need to apply for Medicare benefits three months before you turn 65. If you don’t sign up for Medicare Part B when you’re first eligible at age 65, you may have to pay a late enrollment penalty for as long as you have Medicare coverage. However, if you’re covered under a group health plan based on your or your spouse’s current employment, you should contact the employer’s benefits administrator to see if it might be best to postpone Medicare Part B until you or your spouse retires. This decision will depend on how your insurance works with Medicare. Once the covered employment ends, you may be eligible for a Special Enrollment Period in which to sign up for Part B. If so, you won’t have to pay a late enrollment penalty.

D. You can stop working and not claim your retirement benefits

Stopping work but not claiming your retirement benefits can make sense if you have other sources of income, such as an employer-provided pension, personal retirement savings, or a spouse’s income. If you stop working, your benefits will not increase because of additional earnings. We calculate your benefits based on your highest 35 years of earnings, and if you stop working before you have attained 35 years of earnings there will be years of zero earnings in your benefit calculation. However, your retirement benefits will increase a fraction of a percent for each month after you reach full retirement age that you do not claim them until you reach age 70 due to delayed retirement credits. There is no incentive to delay claiming after age 70.

If you are not receiving your Social Security benefits when you turn 65, you will not be automatically enrolled in Medicare Part A and Part B. You will need to apply for Medicare benefits. If you don’t sign up for Medicare Part B when you’re first eligible at age 65, you may have to pay a late enrollment penalty for as long as you have Medicare coverage.