A Bus Company Says 70% of Its Drivers Are Retirees. At $20.50 an Hour, Social Security’s $24,480 Earnings Limit Works Out to About 23 Hours a Week

A Montana school-bus company says about 70% of its drivers are retired people, and it pays $20.50 an hour. Imagine one of them as a 64-year-old who has already claimed Social Security and took the route job for extra cash and a reason to get out of the house each morning.

Plenty of retired people land in this spot. The extra income is welcome, but working too many hours can mean temporarily losing some Social Security checks. That makes one particular rule especially important for anyone working while collecting benefits before full retirement age (FRA).

Roughly 23 Hours a Week Is Where Withholding Kicks In

For 2026, the earnings limit for people below the age for full benefits all year is $24,480. For anyone born in 1960 or later, FRA is 67, so our 64-year-old stays under it for the whole year.

At $20.50 an hour, $24,480 buys about 1,194 hours of work.

Spread across 52 weeks, that comes to roughly 23 hours a week.

Go past that line and the government deducts $1 for every $2 you earn over the limit. Say the driver picks up extra routes and averages 30 hours a week.

Wages come to $31,980, which is $7,500 over the limit. Half of that, $3,750, gets withheld.

On a monthly benefit of $1,800, that works out to a bit more than two months of checks. Social Security usually holds back whole checks at the start of the year until it has withheld the full amount. If it holds back too much, it pays the extra back after the year ends.

Withheld Checks Come Back as a Larger Benefit

Many working retired people misunderstand this part. Withholding acts as a deferral, and you get credit for it later. Once the driver reaches the age for full benefits, the program recalculates the benefit to give credit for the months benefits were withheld.

If three full monthly benefits are withheld because of the earnings test, Social Security gives the driver credit for those three months when recalculating the benefit. That reduces the early-claiming reduction a little, and the monthly check goes up a little for life. The money comes back slowly over the years. Over time, the larger checks can make up for the benefits withheld, although how much someone ultimately captures depends on their lifespan.

The bigger problem is cash flow. If the household budget depends on that monthly deposit, two or three empty months in January and February can hurt even when the long-run math comes out close to even.

Only Paychecks Count Toward the Limit

The earnings test looks only at wages and self-employment income. Pension payments, IRA withdrawals, interest and dividends don’t count. A retired person who needs more income can draw from savings to fill the gap and keep bus hours near the limit without losing any checks.

The rules relax as 67 gets closer. In the calendar year the driver reaches the age for full benefits, the limit rises to $65,160 and only $1 for every $3 over it is withheld.

Even then, only earnings before the month you reach FRA count. After that, there’s no cap. The work can also pay off directly: if a year’s wages rank among your highest, Social Security recalculates your benefit and pays any increase automatically.

The limit changes every year based on the National Average Wage Index. The 2027 limit should come out around the same time as the next  cost-of-living adjustment, which is currently projected at 3.5%.

Count Annual Hours Before Taking Extra Routes

First, the limit covers the whole year, so your schedule and total wages matter more than whether the job is called part time. Assume the school year runs about 36 weeks. A driver who works only those weeks could average about 33 hours a week and still land near $24,480.

Work 30 hours every week of the year and you’d go over. Before you say yes to summer charters or field trips, multiply the hours by $20.50 and add that to what you’ve already earned this calendar year.

Second, if you expect to go over, tell Social Security your estimated earnings early. Then withholding happens on schedule. If you don’t, you could get an overpayment notice months later asking for money you’ve already spent, and that’s the toughest problem to clean up.

Your benefit amount, birth year and budget will change these numbers, so check them against your own Social Security account before deciding how many routes to take. Cutting back on work brings a few other tax traps worth knowing about, and we walked through all of them in a free semi-retirement guide here.

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