If you’re nearing retirement and thinking about staying in the workforce, even part-time, you’re not alone. But if you plan to collect Social Security while still working, it’s important to understand how your earnings could affect your benefits. Here’s what you should know before making any decisions.
The Earnings Limit
If you claim Social Security before reaching your full retirement age (FRA) and you continue to work, the Social Security Administration sets an annual earnings limit. In 2026, if you earn more than $24,480, you’ll have $1 withheld for every $2 you earn above that threshold.
So, for example, if you earn $30,480 ($6,000 over the limit), Social Security will withhold $3,000 from your benefits for the year.
The rules get a little more forgiving if you hit your FRA by December 31. If you earn more than $65,160, you’ll have $1 in Social Security withheld per $3 of income.
Once you reach FRA, the earnings limit no longer applies. You can earn as much as you want without worrying about any reduction to your monthly benefit.
It’s important to note that “withheld” doesn’t mean “gone forever.” The Social Security Administration recalculates your benefit when you reach FRA and credits you back for months when benefits were withheld. So you will eventually recover that money.
Why Waiting Could Make Sense
If you plan to continue working in retirement, you may want to consider delaying Social Security.
Claiming benefits early permanently reduces your monthly payment, but every year you delay past 62 (the earliest claiming age), your monthly benefit grows. Waiting longer can increase your monthly income for life. And if you delay benefits beyond the full retirement age, your benefit grows until age 70.
For people who are still working and don’t need the income right away, delaying Social Security can be an effective way to lock in a large income stream later in retirement.
Other Ways Work Can Increase Your Benefits
Social Security calculates benefits using your highest 35 years of earnings. If you’re still working and earning more than you did in earlier years, those higher earnings may replace lower-income years, which can increase your future benefit amount.
The Social Security Administration reviews earnings records annually and makes adjustments when appropriate.
How to Maximize Your Social Security Benefits
Getting the most out of your benefits requires a little planning. A few things to keep in mind:
- Review your Social Security earnings record regularly and correct any errors.
- Understand your full retirement age and how claiming early will affect your benefits.
- Think about delaying benefits if you plan to keep working.
- Factor in life expectancy, health, and other retirement income sources.
- For married couples, understand how coordinating your claiming strategies can maximize benefits.
- The Social Security Administration’s website (ssa.gov) has a free calculator that shows your projected benefit at different claiming ages.
Planning for Peace of Mind
Social Security remains a key source of retirement income for millions of Americans, but choosing when you claim benefits can have a lasting impact on your financial security in later years.
If you intend to work in retirement, make sure you understand the earnings limits and how they apply to your situation. With a little planning, you can time your benefits to work in your favor.
