Can You Collect a Pension and Still Work Full-Time?

Use these links to jump to different sections:

• Pension Plans and Working After Retirement
• Who You Plan to Work For Might Matter
• Impacts on Social Security Retirement Benefits
• Questions for an Attorney

Many individuals who have retired realize they would like to continue working. There can be many reasons for taking a new job in retirement:

• Supplementing your retirement income to help cover everyday living expenses, health care, or leisure activities
• Increasing your retirement savings and financial flexibility
• Enjoying work or the opportunity to socialize and make connections
• Not ready to settle into an early retirement

If you are considering a return to the workforce, you may be wondering how this will affect your pension benefits or social security.

In general, you can still collect your pension and social security benefits if you decide to return to work after retirement. However, there are a couple of important factors to consider:

• Depending on where you plan to take a new job, there may be limits on how much you can work while still collecting your pension
• If you have not yet reached full retirement age, there may be some reductions to your social security depending on how much you make annually

This article will give an overview of these topics and help point you to further resources for retirement planning.

Pension Plans and Working After Retirement

A pension plan is a type of retirement plan in which employers pay the retired employee a monthly income for life. The Department of Labor (DOL) sets regulations for pension plans, including the amount employers must contribute each year. Generally, three factors are used to calculate the amount of the pension:

• How long you worked for the company
• How much you were paid
• Your age

Generally, the longer someone works for a company, the greater their pension benefits will be.

You may have a couple of different payment options for receiving your benefits. For example, instead of monthly installments, you might be able to get your entire pension amount in a lump sum.

Getting all the pension money at once can be beneficial in some circumstances. For others, getting a monthly income will be the best option. If you choose a monthly payment, it’s essential to calculate how much you’ll get per month to decide if returning to work is worthwhile.

Who You Plan to Work For Might Matter

One important factor to be aware of when considering a return to work is who you will be working for.

If you plan to work for a different employer than the one paying your pension, there are generally no limits on how much you can work. You can work full time if you wish.

However, if you plan to return to your past employer, you may be limited in the job you can take while still collecting the pension.

If you return to a full-time position with your past employer, your pension payments may stop. But part-time or contract positions may not be included in the employer’s pension plan. So if you return as a part-time or contract worker, you may be able to work with your past employer while still collecting your pension.

California employment law attorney Eric Kingsley says the specific rules governing a pension “depend on the language in the pension document.” It is essential to review your employer’s policies before making a decision about returning to work with your past employer.

If you are unsure about your pension plan provisions, speaking with an employment law attorney can be very helpful.

Impacts on Social Security Retirement Benefits

Returning to work after retirement could have a bigger impact on your social security benefits. The Social Security Administration (SSA) uses a couple of important factors to help determine your benefit amount:

• Your age
• Annual earnings

Full retirement age varies depending on the year you were born. For example, for individuals born between 1943-1954, full retirement age is 66. For individuals born after 1960, full retirement age is 67. Using this Social Security Administration retirement age calculator, you can check your full retirement age.

You can collect social security before reaching full retirement age, but there could be reductions in your monthly benefits. The other factor is how much you earn each year:

• If you’re under full retirement age for the entire year, the SSA will deduct $1 from your benefit payments for every $2 you earn above the annual earnings limit ($19,560 in 2022)
• If you’re under full retirement age for part of the year, the SSA will deduct $1 in benefits for every $3 you earn above a higher limit ($51,960 in 2022)
• You can receive full social security benefits while working with no earning limit if you have reached full retirement age. The SSA will then recalculate your benefit amount, crediting you for any reduced or withheld benefits due to excess earnings

Your social security benefits could be reduced depending on your amount of time to retirement and how much you plan to earn. It’s essential to consider this when evaluating whether it’s financially worthwhile to return to work.

Questions for an Attorney

If you are considering returning to work after retirement and have questions about how work affects your benefits, speaking with an attorney who practices employment law can be beneficial.

Fortunately, many attorneys provide free initial consultations to prospective clients. These consultations allow the attorney to hear the facts of your case and for you to determine if the attorney meets your needs.

To see whether an attorney is a good fit, ask informed questions such as:

• What are your legal fees, and what billing options do you offer?
• What is your experience as an employment attorney?
• What are the rules on my pension plan?
• How will returning to work impact my pension or social security benefits?

You can visit the Super Lawyers directory and use the search box to find a lawyer based on your legal issue or location. 

Consider looking for an employment law attorney to help with pension or other retirement questions.