Why Some Retirees Lose Part of Their Social Security If They Keep Working, And Where the 2026 Earnings Limit Stands

Many Americans continue working after they begin collecting Social Security retirement benefits. Some do it because they enjoy staying active. Others need the extra income to keep up with rising costs.

But what many people don’t realize is this:

If you claim Social Security before reaching your full retirement age and continue working, part of your benefit can be temporarily withheld.

It’s not a permanent cut. But it can reduce the amount that actually shows up in your bank account, and that surprises a lot of retirees.

Here’s how it works in 2026.

You Can Work While Collecting Social Security, But There Are Limits

The Social Security Administration allows you to receive retirement benefits and earn income at the same time. There is no rule requiring you to stop working once you start collecting.

However, if you have not yet reached your full retirement age (FRA), your earnings may trigger what’s called the retirement earnings test.

This test sets income thresholds. If you earn above those limits, the SSA withholds part of your benefit.

Importantly, this rule applies only to earned income, wages from a job or net earnings from self-employment. It does not apply to pensions, investment income, rental income, or withdrawals from retirement accounts.

Where the 2026 Earnings Limits Stand

For 2026, the Social Security Administration set the following earnings limits:

If you are under full retirement age for the entire year, you can earn up to $24,480 without affecting your benefits.

If you earn more than that, the SSA withholds $1 in benefits for every $2 you earn above the limit.

For example, if you earn $30,480 in 2026, which is $6,000 over the limit, the SSA would withhold $3,000 of your annual Social Security benefits.

If you reach your full retirement age during 2026, the rules are slightly different.

You can earn up to $65,160 in the months before reaching your FRA. If you earn more than that amount, the SSA withholds $1 for every $3 earned above the limit, but only until the month you reach full retirement age.

Once you reach full retirement age, the earnings limit disappears entirely. You can earn as much as you want, and your Social Security benefits will not be reduced going forward.

For people born in 1960 or later, full retirement age is 67.

What “Withheld” Really Means

When people hear that they can “lose” part of their Social Security, it sounds like a permanent penalty.

It isn’t.

The money that is withheld under the earnings test is not gone forever. When you reach full retirement age, the SSA recalculates your benefit and gives you credit for the months in which benefits were withheld.

That recalculation increases your monthly benefit going forward.

However, there is no lump-sum repayment. Instead, the adjustment is spread out over future monthly payments. That means you may see a slightly higher benefit later in life, but it may take years to recoup what was withheld earlier.

In the meantime, your monthly deposits may be lower than you expected.

Why This Surprises So Many Retirees

Many retirees claim Social Security early, sometimes at age 62 or 63, and then continue working part-time.

They assume that as long as they are paying Social Security taxes on their wages, their benefit will continue as usual.

But if their income crosses the earnings limit, they may suddenly see smaller deposits, or even have entire monthly payments withheld until the overage is satisfied.

This often happens the year someone picks up extra shifts, returns to work temporarily, or receives a large bonus.

Because the earnings test is based on annual income, even a short period of higher wages can trigger withholding.

Planning Ahead Can Prevent Surprises

If you are considering working while collecting Social Security before full retirement age, it’s important to estimate your annual earnings carefully.

The SSA provides an online Retirement Earnings Test Calculator that can help you estimate how much could be withheld based on projected income.

Some retirees choose to delay claiming benefits until they reach full retirement age specifically to avoid the earnings test.

Others reduce work hours to stay under the threshold.

The right strategy depends on your financial needs, health, and long-term plans, but understanding the earnings limits is critical.

Is it Worth It?

Working in retirement is increasingly common, especially as life expectancy rises and many people want to remain active.

But if you collect Social Security before reaching full retirement age and earn above the 2026 limits, part of your benefit may be temporarily withheld.

That doesn’t mean your benefits are permanently cut.

It does mean the amount landing in your bank account today could be lower than you expect.

For retirees balancing work and benefits, knowing where the earnings limits stand in 2026 can help avoid confusion, and prevent an unwelcome surprise when the next deposit arrives.