Whether by choice or necessity, more and more older Americans are working hard to live out their golden years. According to the U.S. Bureau of Labor Statistics (BLS), as of 2024, 23.4% of men and 16.2% of women over the age of 65 will still be employed (1).
Many of these seniors receive Social Security benefits while still working. According to the Center for Retirement Research at Boston College, approximately 40% of people continue to work after receiving benefits, often for several years(2).
The system allows beneficiaries to earn some employment income, but only up to certain limits. Above these thresholds, benefits are withdrawn and withheld. If you’re in this situation, understanding how the rules work and what your 2026 income thresholds will be can be a key part of your financial plan.
Here’s what you need to know.
It is allowed to work and receive benefits at the same time. However, your employment income may affect your benefits, depending on your age and income level.
If you’re below full retirement age (FRA), you can earn up to $24,480 in 2026 without affecting your benefits(3). This threshold is adjusted annually and is currently 1080 higher than the previous year. The Social Security Administration (SSA) will withhold $1 in benefits for every $2 your income exceeds this threshold.
These income limits are significantly relaxed in the year you arrive in France. If you join FRA in 2026, you can earn up to $65,160 before your benefits are affected, $3,000 more than the previous year. Withholding rates are also more relaxed for beneficiaries who reach FRA in 2026. For every $3 of income above this threshold, the SSA withholds only $1.
Once you reach your FRA and above, the income limits no longer apply. You can earn any amount without affecting your benefits.
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Retirees may have multiple sources of income, and fortunately, the SSA’s earnings test does not consider all forms of income. Simply put, just earned Income is used for testing. This means any wages, salaries or bonuses you earn from your employer. If you are self-employed, the income test only considers net income.
Most forms of passive income, including other government benefits, investment income, interest, pensions, annuities and capital gains, are not included in the test.
In other words, if you rely primarily on passive income and only work part-time or temporary, you are unlikely to meet the threshold that triggers benefit withholding.
If you exceed the threshold, it’s important to know that the amount withheld is not lost forever and can actually increase your benefits in the long run.
The SSA’s earnings test is designed to withhold, not eliminate, early retirement benefits.
Imagine that you turn 62 in 2026 and start receiving benefits. You receive $1,200 per month from Social Security and earn $29,000 per year through part-time work. Because this income exceeded the annual income limit by $4,520, the agency withheld $2,260—half of the amount above the threshold. In reality, that’s about two months of benefits.
If the same pattern continues and you lose about two months of payments each year until you reach full retirement age at age 67, the cumulative reduction will be about 10 months. At that time, Social Security will adjust your benefits as if you filed 50 months earlier instead of 60 months earlier. The difference is significant: Filing five years in advance typically yields about 70% of your full benefit, while filing 50 months in advance increases that to about 74.2%.
These additional years of employment can also increase your benefits if they replace low-income years on your 35-year wage record. The plan uses the average of your highest earning years to calculate benefits, so increased earnings later in your career can boost the average for the rest of your retirement and your monthly checks.
Still, losing some benefits over a few years could impact your retirement plans and budget, so make sure you take this earnings test into account before retiring, claiming benefits, or accepting a new job.
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U.S. Bureau of Labor Statistics (1); Boston College Center for Retirement Research (2); Social Security Administration (3)
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.
