Can I Contribute to an IRA on Social Security?

Numerous avenues of saving for retirement exist for Americans, including the individual retirement account (IRA). An IRA allows you to save money and accrue interest in a protected account throughout your life and begin withdrawing upon reaching age 59 1/2. Determining whether you can contribute to an IRA on Social Security requires an examination of rules and laws concerning IRAs and the nature of the Social Security program.


IRA Rules

A variety of rules affect what you can and cannot do with your IRA. For instance, as of 2011 you many only contribute $5,000 per year to an account when younger than 50 years old and $6,000 per year when older than 50. As per IRA rules, you can only contribute to an IRA with earned income. This rule applies to all IRAs, including traditional, Roth, SIMPLE and more. The earned income requirement directly affects whether you can contribute to an IRA on Social Security.


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Earned Income

Earned income constitutes all income gained in exchange for work. You can receive earned income by working for someone else or for employing yourself at a business you own. Forms of earned income include wages, tips, salaries, union strike benefits and long-term disability benefits. Unearned income constitutes all income not qualifying as earned income, including money gained from capital gains, various forms of interest and benefits. As per this definition, Social Security qualifies as a form of unearned income.


Contributing to an IRA on Social Security

Determining whether you can contribute to an IRA on Social Security proves slightly more complicated than on first glance. Because Social Security benefits are a form of unearned, rather than earned, income, you cannot contribute to an IRA with Social Security funds. However, some Americans receive Social Security benefits for retirement or survivors while working. In such a situation, you can contribute to an IRA while receiving Social Security as long as your contributions come from your earned income.



IRA rules allow working spouses to make contributions to an account in the name of a non-working spouse. This provision allows spouses to retire at different times while continuing to grow their IRAs. For instance, if you retire, begin receiving Social Security and make no earned income, you can no longer contribute to your IRA. However, if your spouse remains employed with a steady stream of earned revenue, your spouse can contribute to your IRA. This remains true until your spouse stops receiving earned income.