Earn More Than $24,480 While Collecting Social Security and This Rule Withholds $1 of Every $2
Working while collecting Social Security sounds simple enough, but a little-known earnings rule can quietly shrink your monthly checks before you even realize it applies to you.
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A lot of people assume that once they start collecting Social Security, they have no choice but to stop working. That’s an incorrect assumption, though.
It can be beneficial for Social Security recipients to continue to work, especially since the average monthly benefit today is only $2,086. That creates an annual paycheck of just $25,000 roughly, which isn’t enough for many people to live on. And since many people inevitably reach retirement with little to no savings, working part-time can be a good way to boost income.
But while you’re allowed to have a job while receiving Social Security, there’s an earnings test you may be subjected to, depending on your age. It’s important to know how the rules work and how your income level might affect your Social Security checks in the near term.
How Social Security’s earnings test works
Before we discuss Social Security’s earnings test and its limits, it’s important to recognize that it only applies to recipients who are getting benefits prior to full retirement age (FRA). Once you reach FRA, which is 67 if you were born in 1960 or any year after, you can earn any amount of money — even $1 million — and still collect your Social Security checks in full.
Rather, the earnings test applies to Social Security recipients who have not reached FRA. Remember, you can start getting Social Security as early as age 62 if you’re willing to accept reduced checks.
If you won’t reach FRA by the end of 2026, you’ll have $1 in Social Security withheld per $2 of earnings above $24,480. So if you want to work while receiving benefits this year but don’t want to worry about withheld benefits, $24,480 is the magic number to keep in mind.
If you’ll be reaching FRA by the end of 2026 but just haven’t gotten there yet, the earnings test limit is much higher at $65,160. Beyond that, you’ll have $1 in Social Security withheld per $3 of earnings.
If you lose benefits temporarily under the earnings test, you should receive that money back in the form of larger monthly checks once your FRA arrives. But for budgeting purposes, it helps to know the earnings test limits.
Those can change every year, though. So if you’ll be working and collecting Social Security prior to FRA next year, you’ll need to keep an eye out for a new set of numbers.
Could Social Security’s earnings test go away?
It’s clear that the earnings test penalizes workers temporarily by withholding benefits. The intent is to ensure that Social Security recipients don’t “double dip” by collecting a paycheck as well as early benefits. But given that many people can’t save for retirement and can’t live on just Social Security, the earnings test reads like a needless punishment in the eyes of some lawmakers.
In fact, there’s actually a push to do away with the earnings test for this reason. The Senior Citizens’ Freedom to Work Act introduced by Rep. Greg Murphy and Sen. Rick Scott seeks to get rid of the rule that subjects early claimants who work to withheld benefits.
Even though funds withheld due to the earnings test aren’t lost forever, that initial withholding can sting. So while it’s important to be mindful of the rule for now, it may not last forever.
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Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, and Kiplinger.
Prior to becoming a full-time financial writer, Maurie worked in the financial industry trading distressed debt. She then changed course and spent a few years designing electronic toys. After a stint in content marketing and UX, she shifted back into writing and has since covered everything from the housing market to estate planning to Medicare.
When she's not busy writing, Maurie can be found hiking, walking her dogs, driving her kids to their various sports practices and games, and curling up with a good book. She cooks on occasion and bakes way too often.
