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Retirement used to mean closing the door on work for good. But in 2025 America, that line is blurrier than ever. Millions of older adults are “semi-retired”—collecting Social Security while still driving Ubers, teaching online, or consulting on the side.
Some do it for purpose. Others, to fight inflation. Either way, many are discovering that second paycheck comes with strings attached.
If you claim benefits before full retirement age (FRA), the Social Security Administration (SSA) may temporarily withhold part of your payments. Emphasis on temporarily—you’ll get the money back later. And starting in 2026, the rules will loosen slightly, letting you earn more before that withholding kicks in.
The Rules as They Stand in 2025
Once you hit full retirement age, you can earn as much as you want—no benefit reductions, no penalties, no paperwork.
But if you’re still below FRA and working, the Social Security earnings test determines how much you can make before part of your check is withheld.
Here’s the current setup for 2025:
| Scenario | 2025 Earnings Limit | Reduction Rule |
|---|---|---|
| You will not reach FRA in 2025 | $23,400 | Lose $1 in benefits for every $2 earned above the limit |
| You will reach FRA in 2025 | $62,160 (applies only until the month you reach FRA) | Lose $1 in benefits for every $3 earned above the limit |
Once you reach your full retirement age, the SSA recalculates your benefit to credit back the months that were withheld. In other words, you don’t lose the money—it’s just delayed.
Still, it can sting in the short term—especially if you cross the threshold without realizing it.
What’s Changing in 2026
The earnings test isn’t going away, but it’s getting a modest update. Every fall, the SSA adjusts the income limits to reflect wage growth and inflation.
The new thresholds, which will be officially announced in October 2025, are projected to rise as follows:
| Scenario | Projected 2026 Limit | Change From 2025 |
|---|---|---|
| Below full retirement age for all of 2026 | $24,360 | +$960 |
| Reaching full retirement age during 2026 | $64,800 | +$2,640 |
That’s nearly $1,000 in extra wiggle room for early retirees and over $2,500 more for those hitting FRA midyear.
Not life-changing, but if you’re taking side gigs or seasonal work, it could mean keeping a few hundred dollars in benefits that would’ve otherwise been withheld.
How the Withholding Really Works
The SSA doesn’t dock your check after every payday. Instead, it estimates your annual income and withholds benefits in advance—usually starting with your early-month payments.
If you earn less than expected, the withheld benefits are refunded later.
Example:
You’re 64 in 2026 and expect to earn $30,000 from part-time work.
- The earnings limit is $24,360, so you’re $5,640 over.
- You lose $1 for every $2 over that limit—about $2,820 withheld.
- The SSA might skip one or two checks early in the year to cover it.
Once you reach full retirement age, your benefit is recalculated upward, permanently increasing future payments.
It’s not a fine, and it’s not a tax—it’s simply a timing adjustment.
Why These Rules Exist
The earnings test is one of Social Security’s most misunderstood provisions. It isn’t designed to punish older workers; it’s meant to level the playing field.
When you claim early—say, at 62—you lock in smaller monthly checks for life. Without the earnings test, early claimers who keep working could out-earn those who waited until FRA, creating a fairness gap.
In simple terms: it’s the SSA’s way of balancing early and late claim decisions.
For the official breakdown, visit the Social Security Administration’s Earnings Test FAQ.
Planning Ahead for 2026
If you’re considering part-time or freelance work next year, a little planning goes a long way.
1. Estimate your income early. Use last year’s numbers to gauge whether you’ll cross the threshold.
2. Report changes to the SSA promptly. They can adjust withholding in real time to avoid large payback adjustments later.
3. Watch your birthday month. Once you reach full retirement age, you can earn freely with no penalty.
4. Consider delaying your claim. Waiting just one year can raise your monthly benefit by 5–8%.
5. Use your online SSA tools. Your My Social Security account lets you check benefits, track income, and see exactly when you reach FRA.
Full Retirement Age: Where It Stands Now
| Birth Year | Full Retirement Age |
|---|---|
| 1954 or earlier | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 or later | 67 |
For anyone born in 1960 or later, 67 is now the “normal” retirement age—the point where you can collect full benefits and work without restriction.
FAQs:
Will my benefits disappear if I earn too much before FRA?
No. Any withheld benefits are returned later through higher monthly payments once you reach full retirement age.
How do I know my full retirement age?
Check your “My Social Security” account or the chart above. For anyone born in 1960 or later, it’s 67.
When will the 2026 limits be confirmed?
Typically in October 2025, when the SSA releases the annual COLA and earnings updates.
