The new year brings a slew of changes to Social Security. While many of them are subtle, they can make an impact on your bottom line — especially if you’re relying heavily on your benefits in retirement.
Not all the changes are positive, but one could help you keep more of your monthly payments in 2026 if you’re continuing to work in retirement. Here’s what you need to know.
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If you’re still working in any capacity while receiving Social Security, you could be subject to the retirement earnings test. This is essentially an income limit that determines how much, if any, of your benefits are withheld due to your work earnings.
The limit only applies to those who are under their full retirement age (FRA), which is between ages 66 and 67, depending on the year you were born. There are two limits: one for those who will reach their FRA in 2026 and another for those who will still be under their FRA for the entire year.
The good news for retirees is that both of these limits have increased for 2026, meaning you can earn more before facing reductions.
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Income Limit: 2026
Income Limit: 2025
Benefit Reduction
If you will not reach your FRA in 2026
$24,480
$23,400
$1 reduction for every $2 in income over the limit
If you will reach your FRA in 2026
$65,160
$62,160
$1 reduction for every $3 in income over the limit
Data source: Social Security Administration.
These higher limits could reduce the amount withheld. For example, say you’re 65 years old with an FRA of 67 and are earning $35,000 per year from your job. In this case, you’d be subject to the smaller income limit since you won’t reach your FRA this year. Your income is $10,520 over the limit, resulting in benefit reductions of $5,260 per year, or around $438 per month.
Last year, though, you’d have seen reductions of $5,800 per year, or around $483 per month, assuming your income was the same. That’s a difference of around $45 per month. Combined with the annual cost-of-living adjustment (COLA), that amounts to a significant chunk of cash.
Benefit reductions always sting, even if the higher income limits help you keep more of your money. Fortunately, these withdrawals are only temporary.
Once you reach your FRA, the Social Security Administration will recalculate your benefit to account for all the money that was withheld. You’ll begin receiving larger checks from then on, and your work income will no longer affect your benefit amount.
Continuing to work in retirement can be a smart way to increase your income, and the higher earnings limits in 2026 can make it easier to stretch every dollar.
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Retirees: This 2026 Social Security Change Could Help You Keep More of Your Benefits was originally published by The Motley Fool
