Retirement doesn’t always mean the end of working. For many people, taking on part-time work after leaving a full-time career is both a financial and emotional decision. Whether it’s to ease money stress or simply to have a reason to leave the house, more retirees are staying in the workforce—and that’s where the Social Security earnings test comes into play.
Knowing how your paycheck affects your benefits is crucial, especially if you start claiming Social Security before reaching full retirement age. The rules can be confusing, but they don’t have to be.
Basics
Social Security allows people to begin collecting retirement benefits as early as age 62. But if you haven’t reached full retirement age—which is 67 for those born in 1960 or later—there’s a limit on how much you can earn from work before your benefits are affected.
This is known as the earnings test. It applies only to income from work (not investments or pensions), and only if you start receiving Social Security before full retirement age.
Withholding vs. Losing
One common point of confusion is the idea that you lose money for working. That’s not quite how it works.
If you earn more than the allowed amount, Social Security will withhold some of your monthly benefits—not take them away permanently. Once you reach full retirement age, the agency recalculates your payments and increases them to make up for what was withheld.
So yes, you may receive less each month while you’re working and under full retirement age—but you don’t lose that money entirely.
2026 Rules
Starting in 2026, the earnings limit is set to increase. This means retirees will be able to earn more from work before their Social Security checks are affected. While the exact threshold hasn’t been finalized yet, it typically adjusts slightly every year based on inflation and wage growth.
This change gives part-time workers more breathing room. You might be able to pick up a seasonal job, consult on the side, or work a few days a week without worrying about benefit reductions. It also makes budgeting easier because you don’t have to monitor every dollar you earn as closely.
Why Working Can Help
Another little-known detail is how working in retirement might actually increase your Social Security benefit later on.
Social Security calculates your monthly benefit using your 35 highest-earning years. If you didn’t work a full 35 years before you started claiming, those missing years are counted as zero in the formula.
So, if you earn even a modest income in retirement, that new year can replace a zero, and your benefit will go up slightly when recalculated at full retirement age. Even if you already have 35 years of earnings, a higher-income year in retirement could bump out a lower one and raise your lifetime payout.
Key Considerations
Here’s what you should keep in mind if you’re planning to work while receiving Social Security before reaching full retirement age:
- The earnings limit applies only to wages and self-employment income—not pensions or investment returns
- Benefits are withheld only if your income exceeds the limit
- Withheld benefits are returned later in the form of higher monthly payments
- Working may help improve your long-term benefit amount
| Factor | Details |
|---|---|
| Claim age | Earliest is 62, full retirement at 67 |
| 2026 earnings limit (est.) | Will increase slightly |
| What counts as income | Wages and self-employment income only |
| What’s not counted | Pensions, annuities, investments |
| If over earnings limit | Benefits withheld, not lost |
| After full retirement age | No earnings limit; full benefits apply |
Whether you’re picking up a few hours at a local shop, working remotely, or running a side hustle, knowing how it ties into your Social Security can help you make smarter choices.
In the end, the system doesn’t punish you for working—it just makes things a bit more complicated until you reach full retirement age. Knowing how the earnings test works can keep you from being surprised by a smaller check and might even help you grow your benefit over time.
FAQs
What is the Social Security earnings test?
It limits how much you can earn before benefits are withheld.
Do I lose benefits if I work?
No, withheld benefits are paid back later by increasing future checks.
Does the earnings test apply after 67?
No, there’s no limit once you reach full retirement age.
Will working in retirement raise my benefit?
Yes, it can if your new earnings replace lower past years.
What income counts toward the limit?
Only wages and self-employment income are counted.
