Everyday · Money & Consumers · Retirement

You can work while collecting Social Security. The $24,480 figure does not mean what most people think.

The retirement earnings test can temporarily reduce payments before full retirement age. It stops applying from the month that age is reached — and Social Security says it recalculates the benefit afterwards to credit the months in which payments were withheld.

AuthoritySocial Security Administration
InstrumentRetirement earnings test; 2026 exempt amounts
Lifecycle stateEFFECTIVE — 2026 amounts
Sources read

Retirement and work stopped being opposite conditions some time ago. People claim Social Security and keep working. They leave one career and start another. They go part-time, or return to a job after benefits have already begun.

That produces one of the most misread numbers in the whole programme: $24,480.

It is not a cap on what a beneficiary is allowed to earn. It is not a point at which Social Security stops. And it does not apply at all once full retirement age arrives. It is the 2026 exempt amount under the retirement earnings test, and the test does something narrower and stranger than most descriptions of it suggest.

Below full retirement age, for the whole year

Social Security states the rule directly: if you are under full retirement age for the entire year, it deducts $1 from your benefit payments for every $2 you earn above the annual limit, and for 2026 that limit is $24,480.

Its own worked example is worth following, because the arithmetic is the part people get wrong. Take a beneficiary entitled to $800 a month — $9,600 for the year — who works and earns $33,400.

SSA’s own illustration, 2026

$33,400 earned
− $24,480 exempt amount
= $8,920 in excess earnings
÷ 2 → roughly $4,460 withheld

That is a withholding from benefit payments. It is not a tax on the wages, and it is not a 50 per cent rate on the extra earnings — those are two different systems that happen to involve the same paycheque.

What counts toward the test is earned income: wages from a job and net earnings from self-employment, including bonuses, commissions and vacation pay. A pension, an annuity, investment income and interest are outside it. That distinction alone resolves a large share of the confusion, because a retiree living on investments and a retiree living on a part-time wage are in completely different positions under the same rule.

The year you reach full retirement age uses a different number, and counts fewer months

In the calendar year a beneficiary reaches full retirement age, two things change at once, and both work in the beneficiary’s favour.

The limit rises to $65,160, and the withholding rate falls to $1 for every $3 above it. More importantly, Social Security counts only earnings up to the month before full retirement age is reached — not the whole calendar year.

So someone reaching full retirement age in November has January through October measured against $65,160. What they earn in November and December is outside the test entirely.

Under FRA all year · 2026$24,480$1 withheld for every $2 above
Year FRA is reached · 2026$65,160$1 for every $3 above, counting only the months before the FRA month
From the FRA monthNo limitEarnings no longer reduce retirement benefits under this test
What countsWages and net self-employmentNot pensions, annuities, investment income or interest

Withheld is not the same word as lost

This is the part most often left out, and leaving it out changes the meaning of everything above.

Social Security states that when a beneficiary reaches full retirement age it recalculates the benefit amount to credit the months in which payments were reduced or withheld because of excess earnings. The monthly benefit from that point is adjusted to account for those months.

That does not make withholding costless. Money not received this year is money not available this year, and a household choosing between hours and cash flow is making a real decision. But it changes the accurate description from “earn too much and Social Security takes it away” to “before full retirement age, excess earnings can cause current benefits to be withheld, followed by a recalculation at full retirement age.”

Those are not the same sentence, and only one of them is what the agency says.

The trap in the first year, and the rule that exists for it

Consider someone who works most of a year at a full salary and then claims mid-year. Measured annually, their earnings blow through the exempt amount before they have received a single payment.

Social Security anticipates this. It applies a special rule for one year that lets it pay a full benefit for any whole month it considers the person retired, regardless of what they earned across the year as a whole.

If you are claiming part-way through a year in which you have already earned substantially, that rule is the specific thing to ask about — by name — rather than assuming the annual figure governs.

Two other numbers that are not this number

The earnings test attracts confusion from adjacent figures that look similar and do something else entirely.

The taxable maximum is not the earnings-test limit. The cap on earnings subject to the Social Security portion of payroll tax is a separate figure governing what a worker pays in, not what a beneficiary can earn while drawing benefits. Medicare does not use the same cap at all.

Benefit taxation is not benefit withholding. Whether some portion of a Social Security benefit is subject to federal income tax is a question of tax law, decided on a different measure of income, and answered on a tax return. Withholding under the earnings test happens before the payment arrives. A household can encounter both, neither, or one without the other.

One question that is really three

Can I keep working on Social Security? collapses three separate questions, and collapsing them is what produces the wrong answer.

  1. Am I allowed to work? Yes. The earnings test is not a permission system.
  2. Can current payments be reduced because of earnings? Possibly — before full retirement age, above the applicable exempt amount, on earned income.
  3. Are those benefits gone? Social Security says it recalculates at full retirement age to credit the withheld months.

Answer them in that order and the decision in front of a household becomes a cash-flow question with a known mechanism, rather than a rumour about losing a benefit.

How to verify this yourself

  • Social Security’s Receiving Benefits While Working carries both 2026 exempt amounts, both withholding rates, the month-before-FRA counting rule, the special first-year rule and the worked $33,400 example used above.
  • SSA publishes an Exempt Amounts Under the Earnings Test table with the current figures and the history, and its own retirement earnings test calculator.
  • Your own benefit amount and earnings record are in your my Social Security account. No general article can see either, and both are what the arithmetic actually runs on.

The exempt amounts are adjusted for most years. A figure quoted from a previous year’s guide is not the figure in force.

Also on this desk