Working and claiming Social Security at the same time seems like the perfect income strategy, especially if you’re worried your retirement savings might not last long enough. In theory, your job and benefits will cover most or all of your monthly expenses, allowing you to leave your savings invested.
In practice, it doesn’t always work out that way. A little-known Social Security rule called the earnings test can actually cost workers their checks and leave them in a financial bind if they’re not prepared.
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How the Social Security earnings test could cost you your benefits
There’s no rule saying you can’t claim Social Security while you’re working, but early claimants — those who apply for benefits under their full retirement age (FRA) — face the earnings test if they do. This withholds money from your paychecks if your job income exceeds certain limits.
In 2026, you lose $1 from your annual benefits for every $2 you earn over $24,480 if you’re under your FRA (which is 67 for those born in 1960 or later) all year. Those who reach their FRA in 2026 can earn up to $65,160 before any withholding is taken from their checks. After this, they lose $1 for every $3 they earn if they haven’t reached their birth month yet.
Whether this is a problem depends on how much you earn from your job and what other income sources you can rely upon. If you’re under the age limit, the earnings test may not affect you. The same goes for whether you can live off your job income alone or if you’re comfortable tapping into personal savings.
If you counted on your Social Security checks to cover a significant portion of your expenses, you may need to rethink your plans for the next few years. Once you hit your FRA, you no longer have to worry about the earnings test, and you’ll actually get a benefit boost to make up for what the Social Security Administration withheld before.
How to plan for the earnings test
You may need to adjust your budget if you’re worried the earnings test could pose a problem. Try to estimate how much you’ll lose from future checks, and figure out how you’ll make up for this. That could be by reducing spending or tapping into your retirement savings to make up the difference.
Keep in mind that the earnings test limits change annually. Remember to check the 2027 limits before the start of the year so you know what to expect.
