Working While Collecting Social Security Could Whittle Your Checks Down to $0. Here’s the Income Level That Does It
Collecting Social Security while still working sounds simple enough, but a little-known earnings rule can shrink your monthly check down to nothing before you even realize it happened. Knowing the threshold that triggers it could save your retirement strategy.
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For many people, claiming Social Security is an invitation to stop working. If those benefits can replace a big chunk of your paycheck, you may be able to kick start your retirement rather than wait.
But if you claim benefits before reaching full retirement age (FRA), which is 67 if you were born in 1960 or later, you’ll be subject to an earnings test that could cause you to lose out on some or even all of your Social Security. Here’s how the earnings test works and the income threshold you need to be aware of.
$24,480 is the trigger point this year
Social Security’s earnings test limit changes every year. In 2026, you’ll lose $1 in Social Security per $2 of earnings above $24,480 if you won’t reach FRA by the end of the year. So if you keep your wages below that point, you shouldn’t run into any issues.
To be clear, it’s only earned wages from a job that counts toward Social Security’s earnings test. If you have investments that pay you interest or dividends, those don’t count toward the $24,480 limit. Neither do withdrawals from a retirement savings plan like an IRA or 401(k).
But here’s how your Social Security check might get whittled down to $0 in practice. Let’s say you collect $1,000 in Social Security per month but earn $48,480 a year. That’s $24,000 above the earnings test limit.
As mentioned above, $1 in Social Security gets withheld per $2 of earnings at this level. So if you exceed the earnings test limit by $24,000, you’ll lose $12,000 in Social Security. If your monthly benefit is only $1,000, that means an income of $48,480 or higher causes you to have your entire Social Security check withheld.
Now that doesn’t mean the money is gone forever. Once your FRA arrives, you should have those withheld benefits returned to you in the form of larger Social Security checks.
But in the near term, you could end up with nothing or very little from Social Security if you earn too much money. So it’s important to understand how the earnings test rules work.
Waiting until FRA to file may be the safer bet
If you know you want to continue working and haven’t reached FRA, waiting until that point to claim Social Security may be a smarter move than filing early. On top of the earnings test, your Social Security checks will be permanently reduced for claiming benefits ahead of FRA.
If you’ll be earning a nice amount of money, you may be in a position to hold off on filing for Social Security to lock in larger checks. And remember, larger benefits mean larger cost-of-living adjustments every year in retirement, not to mention potentially larger survivor benefits if your spouse ends up outliving you and is eligible for those payments.
Plus, at FRA, there’s no more earnings test to worry about. So if you can find a way to cover your costs until that point, you might do your long-term finances a world of good by waiting on Social Security.
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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.
