Who Claims Social Security While Working – And Why Do They? – Center for Retirement Research

Social Security was originally intended for retirement.

Many older people, however, report receiving both wages and Social Security benefits. That pattern is surprising given the huge benefit of filing as late as possible — monthly benefits claimed at age 70 are 76 percent higher than those claimed at age 62 — and the fact that the income test for those under Full Retirement Age (FRA) temporarily withholds a portion of benefits.

How many people are working and looking for benefits? And why do they do it? To answer these questions, colleagues Siyan Liu and Laura Quinby used a Health and Retirement Study (HRS), a survey that interviews a sample of households every two years and contains detailed information about Social Security claims, employment, and income. Using HRS data from 1992-2022, they followed individuals at two-year intervals from age 56 – when most are still working – to age 75, when most are fully retired.

The results show that working after claiming Social Security is very common – 43 percent of people interviewed between the ages of 56-75 have a joint job and benefits at least part of the time (see Figure 1).

Who are these? In order to obtain specific information, the authors focused on the claimant age of these workers’ beneficiaries. As shown in Figure 2, two-thirds of them said before FRA – usually at age 62 – while another 30 percent said between FRA and age 69 – usually at FRA. This pattern suggests different situations and different reasons for seeking.

Those who applied early may have done so because they could not, or chose not to continue working full-time and needed Social Security benefits to cover their expenses. Indeed, this group was less likely to attend college and more likely to work part-time. In addition, benefit workers who file early generally have lower early filing benefits than late filers and experience a greater drop in earnings when they stop working full-time. In particular, their median income dropped by nearly half from $38,700 to $16,500 when they stopped working full-time, and even with Social Security they couldn’t close the gap completely (see Figure 3).

The pattern of those behind the FRA is difficult to understand. Their salary seems to provide almost the same amount as what they earned while working. Therefore, they appear to be in a good position to postpone filing until they are 70 years old, when they will receive their monthly benefits. However, they prefer to ask in advance. Part of the explanation may be that the late claim award — the new delayed retirement credit — only reached a full 8 percent of those born in 1943. If the newness and emergence of the delayed retirement credit is an explanation, one would expect to see more delays to say age 70 among the wealthiest older workers going forward.

The most important implication from this study, is that the majority of worker-beneficiaries are low-wage workers who need their Social Security benefits to pay off debt.