Key Points
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The Social Security retirement earnings test only applies if you claim benefits early.
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The retirement earnings test limit is calculated monthly rather than annually if you retire mid-year.
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Benefits that are withheld for going over the retirement earnings test limit are gradually returned after you reach your full retirement age.
Social Security is generally synonymous with retirement, but that doesn’t mean you have to stop working when you claim benefits. Since you can begin claiming Social Security benefits at age 62, plenty of people claim them and continue working.
If you’ve reached your full retirement age — which is 67 for anyone born in 1960 or later — you’re free to work as much as you want without an impact on your Social Security. If you claim benefits before your full retirement age, you can still work as much as you want, but earning over a certain amount could temporarily reduce your monthly benefit.
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Introducing the retirement earnings test
If you won’t reach your full retirement age in 2026, the earnings limit is $24,480. Earning above that will reduce your annual benefits by $1 for every $2 you earn over it. For example, if you were to earn $6,000 over, your annual benefit would be reduced by $3,000.
If you’re going to reach your full retirement age this year, the limit is $65,160. Earning above that will reduce your benefits by $1 for every $3 over that amount. For instance, going over the limit by $9,000 would also reduce your annual benefit by $3,000.
The annual limit typically increases each year, so it’s worth checking annually if you’re claiming benefits early and still working. You don’t want to be caught off guard by a potential reduction.
It works a bit differently if you retire mid-year
To help in situations where someone retires mid-year and has months’ worth of income that could push them over the threshold, Social Security uses a monthly limit rather than an annual one. The monthly limit is $2,040 if you’re under your full retirement age, and $5,430 if you’ll hit your full retirement age this year.
A big difference with the monthly earnings test is that even if you earn $1 above the limit, Social Security withholds your full check for the month.
There’s also a special catch with the mid-year earnings test. You can’t work more than 45 hours per month in what Social Security calls “substantial services in self-employment.” And if it’s a highly skilled occupation (like a doctor or lawyer), the limit becomes between 15 and 45 hours.
If you were to retire mid-2026, your retirement earnings test would begin on the annual scale on Jan. 1, 2027.
You may eventually receive your benefits back
When Social Security reduces your benefits for going over the limit, they don’t keep them permanently. Once you reach your retirement age, Social Security will recalculate your benefits in a way that gradually returns your withheld benefits.
Social Security says most people live long enough to receive most or all of their withheld benefits back, but that’s obviously not guaranteed. You shouldn’t expect to be fully paid back in under a decade or so.
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