Working While on Social Security: What Could Cost You in 2026

You can absolutely keep your job while collecting Social Security—but there’s a catch that could significantly reduce your monthly payments if you’re not careful.

The 2026 Income Threshold You Need to Know

Social Security implements what’s called an earnings test for beneficiaries who haven’t yet reached their full retirement age. Here’s how it works in 2026:

For those not yet reaching full retirement age: You’ll lose $1 of benefits for every $2 you earn above $24,480 annually. So if you earn $30,000 that year, you’d exceed the limit by $5,520—meaning roughly $2,760 in benefits get withheld.

For those reaching full retirement age later in the year: The threshold jumps to $65,160, with $1 in benefits withheld per $3 earned above that amount. This more generous limit only applies in the year you reach full retirement age.

The good news? Withheld amounts aren’t permanently lost. Once you hit full retirement age, Social Security recalculates your benefits and increases future payments to compensate. However, the immediate cash flow impact during your earlier retirement years can be real.

The Risk of Claiming Too Early

If you’re wondering whether to opt out of claiming Social Security while continuing to work, consider this scenario: claiming before full retirement age locks in a permanently reduced benefit amount—typically 25-30% less monthly income than waiting would provide.

Unlike the temporary withholding from the earnings test, this reduction never goes away. It affects your benefit for life, and by extension, survivor benefits your family receives.

The math matters: Living modestly for a few more years on employment income alone, rather than claiming reduced Social Security benefits, often pays dividends over a 20+ year retirement.

Making the Right Call for Your Situation

Understand your full retirement age first—it varies by birth year and significantly impacts your options. Then calculate whether your anticipated work income would trigger the earnings test limits.

If you’re considering how to optimize your approach to Social Security, recognizing these income thresholds and claiming deadlines should be your starting point. The difference between strategic timing and rushing into benefits can mean tens of thousands of dollars across your retirement.