If You Reach Full Retirement Age in 2027, the Social Security Earnings Test Ends That Month

Quick Read

• Before full retirement age, Social Security withholds $1 for every $3 earned above $67,920 in 2027, and the earnings test stops in the month you reach FRA.

• Benefits that are withheld are not permanently lost; the SSA recalculates payments at FRA and restores them through higher checks, though the short-term hit can strain a budget.

• Claiming before FRA permanently lowers benefits, while waiting until age 70 can raise monthly checks by 24%, so workers with higher earnings may want to delay filing.

A number of people see Social Security as the signal to leave the workforce. Once the monthly checks start arriving, some decide they are finished with a job, particularly if savings can help cover expenses and they are ready to step away from work.

But not everyone is prepared to stop earning right away after beginning Social Security. Some people also cannot afford to give up their paycheck completely.

If your savings are limited and your Social Security benefit is modest, you may need to keep working so you can keep up with your bills. The good news is that the Social Security Administration allows beneficiaries to work while collecting benefits.

If you work while receiving Social Security before full retirement age, you are subject to the earnings test. That rule, however, does not apply forever.

How the Social Security earnings test works for people nearing full retirement age

Once you reach full retirement age, you can earn as much as you want from a job without worrying about the earnings test. Before that point, earning too much can cause some of your benefits to be withheld.

For those reaching full retirement age in 2026, the rule is $1 in Social Security withheld for every $3 earned above $65,160. In 2027, that threshold rises. If you reach full retirement age in that year, Social Security will withhold $1 for every $3 earned above $67,920.

The SSA only applies the earnings test to money earned before the month you reach full retirement age. Once that month arrives, the restriction ends. Until then, earning too much from a job can reduce your monthly benefit checks.

What happens to benefits that are withheld?

Social Security benefits withheld because of excess earnings are not gone for good. After you reach full retirement age, the SSA recalculates your benefit amount and restores the withheld money through larger monthly payments.

That means the issue is usually not permanent loss, but a delay in receiving the money. Even so, the temporary reduction can create a cash-flow problem if you are not prepared for it.

Because of that, it helps to understand how the earnings test works. If you expect to keep earning a substantial paycheck, you may want to wait before filing for benefits.

Claiming Social Security before full retirement age permanently reduces your benefit, whether or not you continue working. If your earnings are enough to cover your costs, locking in a smaller check may not be the best choice.

You should also remember that delaying benefits past full retirement age increases your monthly payments for life. If you are still working when you reach full retirement age, that can be a good reason to hold off. Waiting until age 70 could make your monthly benefit 24% larger on a permanent basis, which may provide more financial security throughout retirement.