In the past, retirement meant stepping away from the workforce and enjoying life without the pressure of a job. But today, many older Americans are blending work and benefits—drawing Social Security while freelancing, consulting or working part-time. Some do it because it gives them purpose; others because rising costs demand it.
However, continuing to earn an income before your full retirement age (FRA) can come with an unexpected twist: your Social Security benefit may be temporarily reduced. The good news: the reduction is only deferred—not lost. And as of 2026, the rules will ease slightly, letting you earn more before you face a penalty.
Current Rules (2025) for Working While Receiving Benefits
Full Retirement Age – No Limits
Once you hit your FRA, you can work any number of hours and earn unlimited income—no reductions, no penalties, no forms.
Before FRA – Earnings Test Applies
If you’re still working and haven’t reached your FRA, the SSA uses the earnings test to figure out how much you can earn before it withholds part of your benefit. Here’s how it breaks down for 2025:
| Situation | 2025 Earnings Limit | How Withholding Works |
|---|---|---|
| You will not reach FRA during 2025 | $23,400 | $1 withheld for every $2 earned over the limit |
| You will reach FRA during 2025 (limit applies only for months before FRA) | $62,160 | $1 withheld for every $3 earned over the limit |
It may feel harsh, but the withheld amount isn’t gone forever. Once you reach your FRA, the SSA recalculates your benefit to restore those withheld months with a higher monthly payment. Still, the temporary loss of payments can be frustrating—especially if you’re surprised mid-year by extra shifts or gigs.
What’s Changing in 2026
The earnings test remains, but the limits will go up to reflect inflation and wage growth. While the official 2026 numbers haven’t been finalized, current projections suggest:
| Situation | Estimated 2026 Limit | Increase from 2025 |
|---|---|---|
| Working all year before reaching FRA | $24,360 | +$960 |
| Reaching FRA during the year | $64,800 | +$2,640 |
That means a little extra breathing room for working seniors—especially those earning income from part-time gigs such as tutoring, ride-share driving or seasonal retail work. It won’t be a windfall, but it could reduce the amount of your benefit that’s withheld.
How the Withholding Process Actually Works
The SSA doesn’t dock benefits after each paycheck; instead, it estimates your yearly earnings and applies the test accordingly—often withholding early-year checks. If you earn less than expected, the withheld payments are refunded in the following year.
Example:
You’re 64 in 2026 and plan to earn $30,000 in part-time work.
• The estimated limit is $24,360, so you’re $5,640 over.
• You lose $1 for every $2 over the limit → about $2,820 might get withheld.
• You might miss one or two monthly benefit payments early in the year.
• Once you reach your FRA, your monthly benefit gets a slight permanent increase to compensate.
Note: This isn’t a tax or fine—it’s simply a timing adjustment on your benefit.
Why These Rules Exist
These earnings rules are often misinterpreted, but the goal isn’t punishment—it’s fairness. If you claim early (as early as age 62), your lifetime benefit is permanently smaller.
The earnings test prevents early claimers who continue working from ending up with more income overall than those who waited and claimed later. In short: it helps keep the system balanced between early and late claimers.
Planning for 2026: Tips for Working While Receiving Benefits
Here are some strategies if you plan to work while collecting Social Security benefits next year:
- Estimate your 2026 income early to avoid surprises. Use your previous year’s earnings as a benchmark.
- Report any income changes to the SSA promptly so your withholding can be adjusted.
- Be aware of your birthday month (FRA)—once you reach it, you’re free to earn without limit.
- Consider delaying your claim if you’re able—waiting a few months can boost your long-term benefit by 5-8%.
- Use your online SSA account to check your projected benefits, verify your FRA date and review withheld payments.
Full Retirement Age: What It Is & Why It Matters
Your FRA is based on your birth year—and determines when you can work with no cap on earnings and receive full benefits. Here’s how it breaks down:
| Birth Year | Full Retirement Age |
|---|---|
| 1954 or earlier | 66 years |
| 1955 | 66 years, 2 months |
| 1956 | 66 years, 4 months |
| 1957 | 66 years, 6 months |
| 1958 | 66 years, 8 months |
| 1959 | 66 years, 10 months |
| 1960 or later | 67 years |
If you were born in 1960 or later, your standard FRA is 67—the point when you can earn without restriction and receive your full Social Security benefit.
Working while collecting Social Security has become a realistic and common choice for many retirees. With the earnings test rules easing slightly in 2026, you’ll have more flexibility—but you’ll still need to plan carefully.
By estimating your income, monitoring the test limits, and knowing your FRA, you’ll be better positioned to strike the right balance between earning and preserving your benefit.
FAQs
Can I work unlimited hours once I reach my full retirement age?
Yes. After you reach your FRA, there are no limits on how much you can earn while receiving full Social Security benefits.
Will the money withheld because I earned too much be lost forever?
No. It’s deferred, not forfeited. Once you reach your FRA, your benefit amount is recalculated upward to account for months you were withheld.
Should I delay claiming Social Security if I plan to work part-time?
Possibly. If you can afford to wait, delaying your claim by a few months can raise your long-term benefit. But you’ll want to estimate your earnings carefully to avoid unnecessary withholding.