What the agency holds back before full retirement age is not a penalty and not a loss: the benefit is recalculated once that birthday arrives.
A person who claims Social Security before full retirement age and keeps working can earn $24,480 in 2026 — $2,040 a month — before the Social Security Administration (SSA) begins withholding benefits, according to the agency’s 2026 cost-of-living fact sheet. Above that line SSA holds back $1 for every $2 earned. The threshold rises sharply in the year a worker reaches full retirement age, and it disappears entirely from the month that birthday falls.
The two limits, and the month they stop applying
The retirement earnings test has three settings in 2026, all published by SSA:
- Under full retirement age for the whole year: $24,480 a year, or $2,040 a month. SSA withholds $1 of benefits for every $2 of earnings above the limit.
- In the year full retirement age is reached: $65,160 a year, or $5,430 a month, counting only the months before that birthday. SSA withholds $1 for every $3 above the limit.
- From the month full retirement age is reached: no limit at all. Earnings of any size have no effect on the benefit.
The figures are set out in the SSA 2026 COLA fact sheet, which is updated each year alongside the cost-of-living adjustment.
The withheld money is not lost
This is the part that is most often misunderstood. Benefits withheld under the earnings test are not confiscated. When a beneficiary reaches full retirement age, SSA recalculates the monthly benefit to credit back the months in which payments were withheld, and the higher amount is paid from then on.
That is to say, the earnings test defers income rather than destroying it. It can still hurt in the short term — a working retiree may see several months with no deposit at all — but the long-run effect on the monthly check is an increase, not a permanent reduction.
An illustration of the arithmetic
Take someone under full retirement age all year who earns $30,000 in 2026. That is $5,520 above the $24,480 limit. At $1 withheld for every $2, SSA would hold back about $2,760 across the year. In the year that person reaches full retirement age, the same $30,000 would sit well under the $65,160 threshold and nothing would be withheld. These are illustrative calculations from the published limits, not official SSA determinations for any individual case.
Full retirement age is 67 for anyone born in 1960 or later
Because the whole test turns on that date, it matters which one applies. Full retirement age is 67 for everyone born in 1960 or later, as SSA confirms in its retirement planner for the 1960 cohort.
The age of claiming has a separate and permanent effect. Claiming at 62 with a full retirement age of 67 cuts the benefit by 30% for life, according to SSA’s age reduction planner. By contrast, delaying past full retirement age earns delayed retirement credits of 8% a year, two-thirds of 1% for each month, up to age 70. In 2026 the maximum monthly benefit is $2,969 at 62, $4,152 at full retirement age and $5,181 at 70.
What it means in practice
Even so, the earnings test is not an argument against working. It applies only to people who have already claimed and are still under full retirement age, it uses a limit that rises every year, and the months it touches are added back later.
For context, the average monthly retired-worker benefit was $2,085.98 in July 2026, on SSA’s own figures. For a beneficiary near that average who is still several years short of 67, the practical question is not whether to work, but whether the timing of a claim and the timing of a paycheck can be arranged so the two do not collide.
