As people age, happiness is often based on connections with family and friends. Some of us may not have those ready-made ties and perhaps need to look elsewhere to stay active and engaged. Having a job may be the answer. But I often hear seniors say, “I can’t work. I’ll lose my Social Security.”

Nothing could be further from the truth.

The fact is that if you are over your Full Retirement Age, you can earn as much as you want or are able without it affecting your Social Security. You could make $1 million, and there would be no change to your monthly payment amount.

Conditions on Payments Between Age 62 and Full Retirement

After about 66, there is no penalty for working, but if you are between 62 and your Full Retirement Age, there may be. If you collected early and are receiving Social Security benefits, you can earn up to $16,920 per year without your payment being affected.

Here’s where the confusion comes in. If you collect early and earn more than $16,920 in a year, you are subject to a penalty of $1 for every $2 you earn over the limit. Your first $16,920 is yours cost-free, but anything over that will be subject to the penalty.

So, if you earn $10,000 a year, there is no penalty, but if you earn $20,920, there’s no penalty on the first $16,920. But the $4,000 over the limit will be penalized. The penalty will be half, or $2,000.

Watch for Social Security Penalties

This penalty is not taken out of your paycheck when you earn it like payroll tax; it is taken out of future Social Security payments. Your monthly payment may be withheld sometime in the future until the penalty is satisfied. This is only if you are under 66 and only if you have earned more than $16,920.

If your monthly payment is $1,000, and your penalty is $2,000, you will miss two full monthly payments. You’ll need to prepare for that. You also must remember that you keep $2,000 of the $4,000 you earned. Only you can decide if working above the limit is worth it for you.

The penalty money will be returned to you in the form of an increase in your monthly payment after your Full Retirement Age, but it may take 10 years or more to be completely reimbursed.

Whether or not you plan to work is a major consideration in deciding when to start collecting Social Security. If you are going to be in a high paying position, you may want to wait until a more financially prudent time.

The Value of Working While Collecting Social Security

Getting a job is an excellent way to stay involved with your community. It can uplift your spirits as well as improve your financial situation and social interactions. It may help bring more happiness and well-being into your life. You may have given up your career, but that’s no reason you can’t get a job.

Do you work and collect Social Security? Have you held back on getting a job for fear of losing your benefits? If you’ve had any experience like this, please join the conversation.