In the United States, full retirement age for Social Security depends on when you were born. As outlined by the Social Security Administration, if you were born in 1958 or earlier, you’re already eligible for your full Social Security benefit. If you were born between 1943 and 1954, the full retirement age is 66. It gradually increases for anyone born between 1955 and 1960 until reaching 67. And anyone born after 1960 can access full retirement benefits at 67.
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Given this information, what are the benefits and drawbacks to working past full retirement age? GOBankingRates reached out to an expert to get the answers. Here’s what he had to say about Social Security and full retirement age.
Geoff Knight, a tax expert and founder of FileTax, said that the biggest advantage to working after full retirement age is that your Social Security payment will be larger.
“Your benefit increases approximately by 8% every year you do not claim it after your full retirement age to age 70. This forms a bigger stream of guaranteed income throughout the rest of your life,” Knight said.
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Knight highlighted that workers aged 50 and above can add additional money into their retirement funds above and beyond the contribution limit. These are called “catch-up contributions.” The amount that can be contributed depends on the account, but as long as you’re working, you can contribute.
“This extra saving time would greatly increase the security of retirement,” Knight said.
Just like your regular income, money you earn from Social Security is subject to taxes, and you can be taxed on up to 85% of your Social Security, depending on your earnings.
That 85% applies if you’re filing single with more than $34,000 income. It also applies if you’re married filing jointly with more than $44,000 in income, per Fidelity.
If you continue to work, Knight pointed out that you might move into a higher tax bracket.
“This involves having to pay higher taxes on normal income and even on investment income. The financial gains of continued working can be compensated for by the additional tax burden,” he said.
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This article originally appeared on GOBankingRates.com: Here’s What Happens To Your Social Security If You Keep Working After Full Retirement Age in 2026
