By the time many people are ready to sign up for Social Security, they’re also ready to stop working, but they may not be able to.
Even if you’re getting Social Security, you may need a paycheck from a part-time job to make ends meet. Or, you may feel compelled to work for the purpose of staying busy more so than to supplement your income.
The good news is that you’re allowed to work while receiving Social Security. But some recipients need to be mindful of an important rule that could result in withheld benefits.
How Social Security’s earnings test works
Even though Social Security allows recipients to hold down a job, those getting benefits prior to reaching full retirement age (FRA) are subject to the program’s earnings test. The earnings test dictates how much wage-based income can be earned before benefits are withheld on a temporary basis.
In 2026, the earnings test limit for workers who will not reach FRA by the end of the year is $24,480. Once earnings exceed that limit, Social Security will withhold $1 in benefits per $2 of income.
Now it doesn’t mean you’re losing that money forever if you get caught in the earnings test trap. Once you reach FRA, the Social Security Administration will recalculate your monthly benefits and repay the money it withheld in the form of larger checks.
In the near term, though, your monthly income may be lower than expected if you have benefits withheld. So it’s important to understand how the earnings test works.
People close to FRA get more leeway
The 2026 earnings test limit is $24,480 for people who won’t reach FRA this year. But there’s a considerably higher limit for those who will reach FRA by Dec. 31.
In that case, the limit is $65,160. And beyond that point, Social Security will only withhold $1 in benefits per $3 earned.
Understand the rules
You should also know that it’s only earnings from a job that are subject to Social Security’s earnings test, including part-time wages, freelance pay, or consulting fees. But other types of income do not count.
Income that’s not factored into the earnings test includes:
- IRA or 401(k) withdrawals
- Capital gains
- Dividends
- Bond, CD, or savings account interest
In other words, let’s say you’re 62 and collecting Social Security, which means you won’t reach FRA this year. If your wages from a part-time job total $18,000 but you also withdraw $20,000 a year from your IRA, you won’t exceed the earnings test limit.
Make claiming decisions with your work plans in mind
Since Social Security’s earnings test rule exists, it’s best to take an honest look at your plans to work before claiming benefits ahead of FRA. If you expect to keep working full time or earn well above the annual earnings test limit, delaying your claim could make the most financial sense.
On the other hand, if you’re planning to retire soon, reduce your work hours, or expect your earnings to stay below the annual limit, claiming earlier could be the right choice for your situation. The key is to know the rules so any choice you make is well grounded.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks