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Medicare and Senior Benefits

Why Earning Too Much Can Reduce Your Social Security Benefits Before Full Retirement Age

Digilifetrends Published 3 min read

There’s a simple reason many people rush to claim Social Security at age 62: it’s the earliest point at which retirement benefits can begin. For a lot of retirees, that first check feels like the key to leaving work behind.

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A close-up overhead shot of personal financial items. On a dark wood surface, there are reading glasses at the top, partially obscuring two green-tinted United States Treasury checks. Below these is a blue and white Social Security card. Underneath the card, three one-hundred dollar bills are fanned out, showing Benjamin Franklin's portrait and the 'FEDERAL RESERVE NOTE' text.
An arrangement of Social Security documents, Treasury checks, and hundred-dollar bills illustrates the financial components of government support. This imagery highlights the importance of Social Security benefits, particularly for low- and moderate-income Americans discussed in the article.

But starting benefits at 62 does not always mean a person is ready to stop working entirely. Health, stamina, or the demands of a job may make full-time work difficult, yet Social Security alone may still fall short of covering basic expenses.

That is why some people choose to keep working part-time while collecting benefits. It can be a way to reduce the strain of full-time employment while still bringing in enough income to manage monthly bills.

You are allowed to work while receiving Social Security. However, if you do so before reaching full retirement age, there can be consequences, and it helps to understand them in advance.

How the earnings test can reduce your checks

For people born in 1960 or later, full retirement age is 67. That is the age at which you can receive your full monthly Social Security benefit without a reduction, and it is also the point at which you can earn any amount from work without affecting those benefits.

Before that age, working while collecting Social Security can trigger the earnings test. If your job income is too high, some or even all of your benefit payments may be temporarily withheld.

For 2026, the earnings test limit for people who will not reach full retirement age by the end of the year is $24,480. Above that threshold, Social Security withholds $1 in benefits for every $2 earned.

If benefits are withheld because you earn too much, the money is not permanently lost. Once you reach full retirement age, the Social Security Administration adjusts your monthly benefit upward to account for what was withheld.

Still, the immediate effect can be painful. Higher earnings in the short term may cause your Social Security check to shrink, which can put serious pressure on your budget.

For example, if someone receives $18,000 a year from Social Security after filing at 62 but needs $50,000 annually to cover expenses, they might take a part-time job to earn the remaining $32,000. But if that income exceeds the earnings test limit, part of the benefit would be withheld.

That could leave the person short of the money needed to pay current bills. Even if those withheld benefits are eventually restored after reaching full retirement age, that does not help much when expenses are due right away.

Plan ahead to avoid a surprise

There are sensible reasons to keep working while collecting Social Security. The important thing is to know the earnings test and its limits so you can plan accordingly and avoid an unexpected financial squeeze.

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