Why Working Past 62 Shrinks Your Social Security Check by $1 for Every $2 You Earn Over $24,480
Quick Read
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Collecting Social Security before age 67 while earning over $24,480 triggers a $1 withholding for every $2 earned above that limit.
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Withheld benefits aren’t lost permanently. Social Security returns them as larger monthly checks once you reach full retirement age.
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Short-term cash flow risk is real. Withheld benefits can’t cover immediate bills, even if they’re eventually recovered at FRA.
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There’s a reason so many people are eager to claim Social Security once they turn 62. Age 62 is the soonest retirement benefits become available. And for many folks, filing for Social Security is their ticket to no longer having to work.
But just because you’re claiming Social Security at 62 doesn’t mean you’re ready to stop working for good. It may be that you can no longer handle a full-time job mentally or physically, but your Social Security benefits at 62 aren’t enough to cover your costs in full.
In that situation, you may decide to work part-time while collecting Social Security. That way, you don’t have to maintain as hectic a schedule, but you can also pay your bills with ease.
You’re allowed to work while receiving benefits from Social Security. But if you do so prior to reaching full retirement age (FRA), there could be consequences. And it’s important to know what those entail.
How Social Security’s earnings test rule could come back to bite you
Social Security’s FRA is 67 for anyone born in 1960 or later. FRA is when you can collect your monthly Social Security checks without a reduction. It’s also the age when you can earn any amount of money from a job without it having a negative impact on your Social Security benefits.
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But if you work while collecting Social Security before FRA, you’ll be subject to an earnings test. And if you earn too much money from a job, you risk having some or even all of your Social Security checks withheld.
In 2026, the Social Security earnings test limit for people who won’t reach FRA by the end of the year is $24,480. Beyond that limit, you’ll have $1 in Social Security withheld per $2 of earnings.
If you end up having benefits withheld because you make too much money, they won’t be lost permanently. Once you reach FRA, the Social Security Administration will return that money to you in the form of larger monthly benefits.
However, in the near term, earning too much could cause your Social Security checks to shrink. That could have huge implications for your budget.
Let’s say you’re able to bring in $18,000 a year in Social Security by filing for benefits at 62, but you need $50,000 a year to cover your costs. You may decide to work part-time and earn the remaining $32,000. But since that sum is above this year’s earnings test limit, you’ll have a portion of your Social Security check withheld.
That means you may not end up with enough money to cover your expenses. And while you should eventually get that money back after reaching FRA, that doesn’t do you much good in the near term, since your bills can’t wait until FRA to be paid.
Don’t get caught off guard
There are plenty of good reasons to work while collecting Social Security. But it’s important to know that the earnings test exists and what its limits entail. That way, you’ll know what to plan for in order to avoid a financial crunch.
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