Additional Coverage:
- Getting Social Security and Working? Here Are the 2026 Rules Changes You Must Know (financebuzz.com)
Working in Retirement? Here’s What You Need to Know About Social Security in 2026
For many Americans, retirement isn’t always a complete exit from the workforce. Whether by choice or necessity, working into your 60s and beyond is becoming increasingly common.
But if you’re planning to collect Social Security while still earning a paycheck, it’s crucial to understand how your work income will interact with your benefits. The rules are set to shift a bit in 2026, and knowing the ins and outs can help you avoid unwelcome surprises and plan your finances more effectively.
Even a modest income can have different implications depending on when you start claiming your benefits. So, let’s break down what working retirees should know about the upcoming Social Security changes.
The 2026 Social Security Earnings Test: What’s New?
Good news for those who want to keep working! The Social Security Administration (SSA) allows you to collect benefits while employed, but your age and how much you earn will determine if any of your benefits are temporarily withheld.
For 2026, if you haven’t yet reached your full retirement age (FRA) for the entire year, you can earn up to $24,480 without it affecting your benefits. That’s a slight bump of $1,080 from the 2025 limit. If you earn more than that, the SSA will withhold $1 in benefits for every $2 you earn above the threshold.
Things get a bit more lenient in the year you actually reach your FRA. If your birthday means you hit FRA in 2026, you can earn up to $65,160 before your benefits are reduced – a $3,000 increase from 2025.
In this case, the SSA only withholds $1 for every $3 you earn above the limit. Once you’re officially at or past your FRA, the earnings test disappears entirely, and you can earn as much as you like without any impact on your Social Security payments.
Not All Income Counts Towards the Earnings Test
It’s important to remember that the Social Security earnings test is only concerned with income you earn from working. This includes things like wages, salaries, bonuses, commissions, and your net income if you’re self-employed.
What’s excluded? Other income sources such as pensions, annuities, investment income, interest, dividends, and capital gains.
This distinction can be a big deal for retirees who rely more on passive income than on a regular paycheck. Someone working a few hours a week while drawing heavily from investments might easily stay below the earnings limit.
Even if your earnings do exceed the limit, the good news is that any withheld benefits aren’t lost forever, which can help ease some of the worry.
Withheld Benefits Aren’t Gone for Good
If your benefits are withheld because you earned too much, it’s not a permanent reduction. Once you reach your FRA, the SSA will recalculate your benefit amount. They’ll credit you for the months when payments were withheld, which will result in an increase in your ongoing monthly benefit.
Think of the earnings test less as a penalty and more as a temporary shift in when you receive your benefits. While you won’t get a lump sum repayment, your higher monthly benefit later on reflects those delayed payments. Understanding this can help you decide if continuing to work aligns with your immediate cash flow needs.
Working Longer Could Boost Your Future Benefits
Your Social Security benefits are calculated based on your 35 highest-earning years. If you have fewer than 35 years of earnings when you claim benefits, those missing years are counted as zeros in the calculation, which can lower your overall benefit. Continuing to work can replace one of those “zero” or low-earning years with a higher-earning one.
Even modest earnings later in life can improve your average indexed monthly earnings, potentially leading to a permanently higher benefit, especially if you’ve had career gaps. For some retirees, this means working longer provides both immediate income and long-term benefit growth.
The Power of Delaying Your Benefits
Delaying when you start collecting Social Security benefits beyond your FRA can significantly increase your monthly payment through “delayed retirement credits.” For every full year you wait to claim after your FRA (which is age 66 or 67, depending on your birth year), your benefit grows by approximately 8% – up until age 70.
These higher lifetime benefits can be a powerful tool against longevity risk and the rising cost of living. While delaying isn’t practical for everyone, it can substantially boost your monthly income if you can afford to wait. Combining delayed claiming with continued work can truly strengthen your long-term financial stability.
The Bottom Line for 2026
Working while collecting Social Security in 2026 comes with updated earnings limits and rules that can impact your short-term cash flow. However, remember that any withheld benefits are usually temporary, and continued work can actually increase your future payments. Even small decisions about when you work and when you claim can have a significant influence on your lifetime benefit outcomes.
By understanding how earnings, timing, and benefit adjustments interact, you can make informed choices that better support your overall retirement plan as these rules continue to evolve.