Reach Full Retirement Age in 2027 and the Earnings Test Disappears. Until That Month, It Takes $1 of Every $3 Over $67,920
Working while collecting Social Security can quietly shrink your checks, and one specific month decides when that penalty finally vanishes. Before you claim early or take that next paycheck, find out what happens to the money Social Security holds back.
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A lot of people use Social Security as a reason to stop working. And once those monthly benefit checks start coming in, you may decide that you’re done holding down a job, especially if you have savings to supplement your benefits and are tired of being on the clock.
But some people aren’t ready to stop working once they start Social Security. And some people also can’t afford to give up their paycheck entirely.
If you don’t have a lot of savings and only receive a modest Social Security check each month, you may need to continue working to ensure that you’re able to pay your bills. And the good news is that the Social Security Administration (SSA) allows beneficiaries to continue working.
If you work while receiving Social Security prior to full retirement age (FRA), you’ll be subject to an earnings test. But that restriction doesn’t last forever.
How the Social Security earnings test works for people reaching FRA
Once FRA arrives, you can earn any amount of money from a job without having to worry about Social Security’s earnings test. Prior to FRA, you’ll risk having benefits withheld for making too much money from a job.
In 2026, people who will reach FRA by Dec. 31 will have $1 in Social Security withheld per $3 of earnings above $65,160. In 2027, the earnings test limit is going up. If you’re reaching FRA next year, you’ll have $1 in Social Security withheld per $3 of earnings above $67,920.
The SSA only counts earnings before the month you reach FRA against you in the context of the earnings test. So the month you reach FRA, you’re off the hook. Until then, you should know that earning too much from a job could shrink your monthly checks.
What happens to withheld benefits?
Social Security benefits that are withheld for earning too much money are not lost forever. Once you do reach FRA, the SSA recalculates your monthly benefits and returns those withheld benefits to you in the form of larger checks.
So the concern isn’t losing the money completely, so much as losing it in the near term. But that could throw you into a budget crunch if you aren’t careful.
For this reason, it’s important to familiarize yourself with how Social Security’s earnings test works. And if you’re going to continue earning a substantial amount of money from a job, you may want to hold off on claiming benefits ahead of FRA.
Filing for Social Security before FRA reduces your benefits permanently regardless of whether you work or not. That reduction may not be worth locking in if you can earn a decent paycheck that covers your expenses.
You should also know that delaying your Social Security claim past FRA results in boosted monthly checks for life. If you’re still working at FRA, that’s a good reason to sit tight a bit longer. If you hold off on filing for benefits until 70, your monthly checks could be 24% larger on a permanent basis. That could buy you a lot more financial security throughout retirement.
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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, The Washington Post, 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.
