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When a person receives Social Security retirement benefits and works at the same time, the Social Security Administration (SSA) warns that benefits can be reduced if they exceed a certain annual earnings limit.
This is especially the case for those who retired before full retirement age of 67. Earnings limits are updated every year because of the Cost-of-Living Adjustment (COLA).
What happens, according to the SSA, when someone receives Social Security retirement benefits and keeps working?
The SSA reduces the benefits of people who keep working if they exceed the annual earnings limit set for people who have not yet reached full retirement age.
On the other hand, the month full retirement age is reached, benefits can be received with no earnings limit.
There are two criteria for reducing benefits:
- If the person does not reach full retirement age during the entire year, $1 is deducted from benefits for every $2 earned above the annual limit.
- If the person reaches full retirement age during the year, $1 in benefits is deducted for every $3 earned above the limit. However, in this case only income earned before the month full retirement age is reached counts.
Likewise, while the worker remains employed, even if they receive benefits, they will continue paying Social Security taxes on earnings, so their benefits can increase after the annual review of their record.
What are the SSA income limits?
During 2026 the following earnings limits apply:
- People under full retirement age for the entire year: $24,480.
- People who will reach retirement age during the year: $65,160.
After the Cost-of-Living Adjustment that will take effect in 2027, the amounts are as follows:
- People under full retirement age for the entire year: $25,560.
- People who will reach retirement age during the year: $67,920.
What does the SSA count as income, and what assets are left out of the calculation?
According to the SSA’s answer in the Frequently Asked Questions section, for benefit reductions, only wages earned from work or net earnings if the person is self-employed are considered. Bonuses, commissions and vacation pay are included.
Other income is not counted, including:
- Pensions.
- Annuities.
- Investment income.
- Interest.
- Veterans benefits.
- Other government or military benefits.
What happens to the retirement money cut for exceeding the earnings limit?
The money the SSA withholds for exceeding the annual earnings limit is not lost for good. When the beneficiary reaches full retirement age, the agency adjusts the monthly benefit amount to account for the months when payments were reduced or benefits were not paid because of work income.