Key Points

Combining work and benefits may raise your future payments along with your current lifestyle.
It may also expose you to reductions via the earnings test.
You might owe taxes on as much as 85 percent of your payments.

You have probably weighed the best time to begin Social Security, yet you may not have examined whether to start while still employed. That choice calls for careful review.

Receiving Social Security during employment offers certain gains but also carries risks. Below are two upsides and two downsides to weigh before choosing what suits your situation.

Two benefits of working and claiming Social Security together

Two primary routes exist for gains when employment and Social Security overlap:

1. It may raise your future payments

Continued work today can lift later checks if current earnings exceed those from earlier years. The Social Security Administration checks your record each year, and any update to your 35 highest years can lift the benefit above the usual yearly cost-of-living adjustment.

2. It may raise your living standard now

Adding job income to Social Security can enlarge monthly cash flow and support a more comfortable life than either source alone. Results vary by individual.

Two drawbacks of working while claiming Social Security

These issues do not affect everyone, yet if they seem likely you may prefer to delay your application:

1. You may lose part of your payments to the earnings test

High job earnings can trigger reductions under the earnings test, but only before full retirement age. The loss may equal several months of checks, yet any withheld amount returns later as a lasting increase once full retirement age arrives.

2. You may face higher odds of taxes on benefits

Job pay adds to provisional income used to decide whether up to 85 percent of benefits become taxable. Large earnings can therefore require repayment of part of your checks at tax time.

If these risks concern you, consider waiting to apply until you stop working. That step avoids the earnings test and helps control taxes in the short term.