Working While Claiming: Earnings Limits and Tax Impacts
Many retirees choose to continue working part-time or consulting while drawing Social Security benefits. If you claim benefits before reaching your Full Retirement Age and continue to earn wage or self-employment income, the SSA applies the mandatory Retirement Earnings Test.
The earnings test sets strict income thresholds. If your earned income exceeds these thresholds, the SSA temporarily withholds a portion of your monthly benefit checks. For 2026, the specific earnings limits are:
- Under Full Retirement Age for the entire calendar year: The annual earnings threshold is $24,480 ($2,040 per month). The SSA withholds $1 from your benefit checks for every $2 you earn above this threshold.
- In the year you reach Full Retirement Age: The annual earnings limit rises significantly to $65,160 ($5,430 per month) for the months preceding your birthday month. The SSA withholds $1 for every $3 you earn above this limit.
- Upon reaching Full Retirement Age: The Retirement Earnings Test eliminates all wage limits. You can earn an unlimited income without suffering any benefit withholdings.
Many retirees misunderstand this withholding, assuming the government confiscates their hard-earned money forever. In reality, withheld benefits are not lost. Once you reach your Full Retirement Age, the SSA recalculates your baseline benefit upward to credit you for the months benefits were withheld. This adjustment permanently increases your future monthly check.
However, working while receiving benefits can trigger unexpected taxation. The federal government taxes up to 85 percent of your Social Security benefits if your “combined income” exceeds specific non-indexed statutory thresholds. Calculated by the Internal Revenue Service, your combined income equals your Adjusted Gross Income (AGI) plus non-taxable interest income plus 50 percent of your annual Social Security benefits.
| Tax Filing Status | Combined Income Threshold | Portion of Social Security Subject to Federal Tax |
|---|---|---|
| Single / Head of Household | Under $25,000 | 0% |
| Single / Head of Household | $25,000 – $34,000 | Up to 50% |
| Single / Head of Household | Over $34,000 | Up to 85% |
| Married Filing Jointly | Under $32,000 | 0% |
| Married Filing Jointly | $32,000 – $44,000 | Up to 50% |
| Married Filing Jointly | Over $44,000 | Up to 85% |
Because these federal income thresholds do not automatically increase with inflation, ordinary withdrawals from tax-deferred accounts—such as traditional 401(k) plans or traditional IRAs—can easily push your combined income into taxable territory. Planning distributions carefully preserves your take-home cash flow.
I plan to wait until I am 72 years old. If everyone waited a little longer, it would help in balancing the U.S. Federal Budget. How much would I receive, being born in 1967?
72 won’t change your benefits. 70 is the cut off age. So weather you retire at 70 or 72 it will be the same.