For many Americans today, retirement doesn’t always mean stepping away from work completely. Rising living costs, longer lifespans, and a desire to stay active have led millions of older adults to draw Social Security benefits while also generating extra income through part-time jobs, consulting, or freelancing. While that second paycheck can help, it can also trigger something called the Social Security earnings test, which may temporarily reduce your monthly benefits if you haven’t yet reached full retirement age (FRA).
However, starting in 2026, the income limits linked to these earnings rules are expected to increase, giving retirees slightly more breathing room. Here’s what’s changing, what stays the same, and how to plan.
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How the Rules Work Right Now (2025)
If you’ve already reached your full retirement age, you can earn as much as you want without any reduction to your Social Security payments. But if you’re below FRA and still working, the Social Security Administration (SSA) sets annual earning limits that determine how much you can make before benefits are withheld.
Current Rules for 2025:
| Scenario | 2025 Earnings Limit | Reduction Rule |
|---|---|---|
| You will not reach full retirement age in 2025 | $23,400 | $1 withheld for every $2 earned above the limit |
| You will reach full retirement age during 2025 | You will reach full retirement age in 2025 | $1 withheld for every $3 earned above the limit |
It’s essential to remember that withheld benefits are not lost. When you reach your FRA, your benefit amount is recalculated and increased to account for any reductions taken earlier.
What Will Change in 2026
The earnings test isn’t being eliminated, but the income limits are expected to rise due to inflation and wage growth adjustments. These new limits are typically confirmed each October when the SSA announces the annual cost-of-living adjustment.
Projected 2026 Limits:
| Scenario | Projected 2026 Limit | Change from 2025 |
|---|---|---|
| Under FRA for all of 2026 | $24,360 | +$960 |
| Reaching FRA in 2026 | $64,800 | +$2,640 |
This means retirees who continue part-time work could keep more of their Social Security benefits instead of having them withheld.
How Withholding Works in Real Life
The SSA doesn’t reduce your benefits based on each paycheck. Instead, it estimates your expected earnings for the year and adjusts early Social Security payments upfront.
Example:
- You are 64 in 2026 and expect to earn $30,000.
- The projected limit is $24,360, meaning you exceed the limit by $5,640.
- The SSA withholds $1 for every $2 over the limit → about $2,820.
- This could result in one or two early benefit checks being paused.
Once you reach FRA, the SSA automatically increases your monthly benefit to repay what was withheld.
Why These Rules Exist
The earnings test is designed to balance benefit payouts between people who claim early and those who wait. If someone claims early and keeps working, their benefit reduction ensures they don’t receive more overall than someone who delays retirement and gets higher monthly payments later on.
Planning for 2026
To avoid surprises, consider these steps:
- Estimate your earnings early in the year.
- Report income changes to SSA to avoid over-withholding.
- If you can, delay claiming benefits to boost monthly payouts.
- Track your FRA — once you hit it, you can earn without restrictions.
- Use your my Social Security online account to monitor benefits.
Full Retirement Age Chart
| Birth Year | Full Retirement Age |
|---|---|
| 1954 or earlier | 66 |
| 1955 | 66 + 2 months |
| 1956 | 66 + 4 months |
| 1957 | 66 + 6 months |
| 1958 | 66 + 8 months |
| 1959 | 66 + 10 months |
| 1960 or later | 67 |
FAQs
A – No. Any withheld benefits are returned later through higher monthly payments after you reach full retirement age.
A – The SSA typically confirms the new earning limits in October during the annual COLA announcement.
A – Yes. After reaching your full retirement age, you can earn any amount without affecting your Social Security benefits.
