If you’re collecting Social Security at age 62, you can earn up to $24,480 in 2026 from a job or self-employment before the agency starts holding back part of your benefits.1Social Security Administration. Receiving Benefits While Working Earn more than that and Social Security withholds $1 for every $2 you go over. The limit rises each year with the national average wage index; it was $22,320 in 2024 and $23,400 in 2025.2Social Security Administration. Exempt Amounts Under the Earnings Test
A quick example. Suppose your monthly benefit is $600, giving you $7,200 for the year, and you earn $26,080 from a part-time job. You’re $1,600 over the limit, so Social Security withholds $800 from your benefits across the year.3Social Security Administration. How Work Affects Your Benefits
What Counts Against the $24,480 Limit
The earnings test looks at money you actively work for. That means gross wages on your W-2 and net earnings from self-employment after allowable business deductions.4Social Security Administration. Benefits Planner: Retirement – Calculate Your Net Earnings from Self-Employment If you run a business, you subtract IRS-allowable costs — materials, rent, depreciation — from gross revenue, and only the profit counts.
A lot of retirement income is invisible to the test. Pensions, annuities, interest, dividends, IRA and 401(k) withdrawals, government retirement pay, and rental income (unless you’re in the real estate business) don’t count.5Social Security Administration. What Income Is Included in Your Social Security Record? Someone pulling $50,000 a year from a 401(k) while earning $20,000 from a part-time job stays under the limit. The $50,000 is simply not part of the calculation.
How Social Security Takes the Money
The withholding isn’t shaved off each month. Social Security withholds entire monthly payments starting in January until it recovers the full amount you owe.6Social Security Administration. SSA Handbook Section 1804 – How Excess Earnings Are Charged Against Benefits If you owe $5,000 in withholding and your monthly benefit is $1,500, you receive nothing for the first three months, a partial check in April, and then regular payments the rest of the year.
The agency bases the withholding on the earnings estimate you provide at the start of the year. If you overestimate, too many checks may be held; Social Security reconciles the following year once actual W-2 and tax data arrive.7Social Security Administration. POMS RS 02501.095 – Charging Excess Earnings
If You Retire Partway Through the Year
Plenty of people file for benefits mid-year after already earning well above $24,480 from their old job. Social Security handles this with a first-year rule that switches from an annual test to a monthly test. In your grace year, you get your full benefit for any month you earn $2,040 or less (in 2026) and don’t perform substantial self-employment work.8Social Security Administration. Benefits Planner: Retirement – Special Earnings Limit Rule
The monthly test only applies once. Starting the next calendar year, you’re back on the annual limit. The rule is there so someone who earned $80,000 through June and then genuinely retired doesn’t lose their remaining months of benefits.
A Higher Limit Once You’re Close to Full Retirement Age
For anyone born in 1960 or later, full retirement age is 67. In the calendar year you reach that age, a more generous limit applies: $65,160 in 2026, and the withholding rate drops to $1 for every $3 over the limit. Only earnings from the months before your birthday month count.9Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
Once you hit your full retirement age month, the earnings test disappears entirely. You can earn any amount from work without affecting your Social Security check.1Social Security Administration. Receiving Benefits While Working
Withheld Benefits Aren’t Lost
This is the part that reframes the whole question. Money withheld under the earnings test is closer to a deferral than a penalty. When you reach full retirement age, Social Security recalculates your monthly benefit and credits you back for the months benefits were withheld, by adjusting the early-retirement reduction as though you’d claimed later.1Social Security Administration. Receiving Benefits While Working
There’s a second adjustment too. If the years you work while collecting turn out to be among your highest-earning years, Social Security recalculates your primary insurance amount to include them, retroactive to January of the year after you earned the money.10Social Security Administration. Program Explainer: Retirement Earnings Test Together, these two recalculations often leave someone who kept working with a larger monthly check at full retirement age than they’d have had if they’d simply stopped working at 62.
Reporting Earnings and Handling Year-End Payments
If you told Social Security you’d keep working, the agency sends you an annual form asking for an updated earnings estimate. You can also report changes through your online account or your local field office.11Social Security Administration. What You Must Report While Getting Retirement Let the agency know if you expect to earn more than your original estimate, or if you start working after saying you wouldn’t.
One issue trips people up: payments that arrive after you retire but reflect work you did earlier. A year-end bonus, accumulated vacation pay, or severance covering prior work generally shouldn’t count against the current year’s earnings limit. Your employer can file Form SSA-131 to document that the payment covers work performed before retirement.12Social Security Administration. Employer Report of Special Wage Payments Without that form, Social Security may allocate the income to the wrong year and withhold benefits you’re actually owed.
The Earnings Test Is Separate From Taxes on Benefits
Staying under $24,480 keeps your monthly checks intact, but it doesn’t shield your benefits from federal income tax. Taxation runs on a different formula: your combined income, which the IRS defines as adjusted gross income plus nontaxable interest plus half of your Social Security benefits.13Internal Revenue Service. IRS Reminds Taxpayers Their Social Security Benefits May Be Taxable
The thresholds:
- Single filers with combined income between $25,000 and $34,000 owe tax on up to 50 percent of benefits. Above $34,000, up to 85 percent is taxable.
- Married filing jointly: the 50 percent tier runs from $32,000 to $44,000, and above $44,000 up to 85 percent is taxable.
- Married filing separately while living with your spouse at any point in the year: up to 85 percent of benefits may be taxable at any income level.14Office of the Law Revision Counsel. 26 USC 86 – Social Security and Tier 1 Railroad Retirement Benefits
Unlike the earnings test, the taxation formula counts everything: pension income, IRA withdrawals, dividends, and half your Social Security. A 62-year-old earning $24,000 from part-time work while collecting $15,000 in annual benefits already has combined income around $31,500 before adding any other retirement income, which puts a single filer close to the 50 percent taxation tier. It’s worth checking both calculations when you plan the year.