If you’ve been working for a long time and have finally reached the age of eligibility for Social Security retirement benefits, you may think that applying for benefits guarantees you a steady income. However, for some early claimants who earn a significant amount of money from their jobs, this may not be the case. Let’s take a closer look at how the earnings test could impact your Social Security benefits in 2026.
The Social Security earnings test is a provision that can cause a reduction in your benefits if you earn above a certain threshold while you are under your full retirement age (FRA), which is typically 67 for most individuals. In 2026, if you are under your FRA for the entire year, you will lose $1 from your benefits for every $2 you earn over $24,480. If you are expected to reach your FRA this year, the reduction is $1 for every $3 you earn over $65,160.
While the reduction in benefits due to the earnings test is not permanent, it can still be a significant loss in income during the months when you are affected. The withheld amount will be factored into your benefit calculation once you reach your FRA, resulting in a higher benefit amount in the future.
The average Social Security benefit in April 2026 is $2,081 per month, totaling $24,972 annually. It may seem challenging to lose this amount to the earnings test, but it can happen more easily than you think. If you are under your FRA for the entire year, earning more than $74,424 annually could result in the forfeiture of your entire average benefit checks.
If you are expected to reach your FRA later in the year, the income threshold to lose benefits will vary based on your birth month. For example, if you were born in December, you would need to earn over $65,160 plus three times your expected benefits during the months you are under your FRA, totaling $133,833.
While this may not be a concern for most low to middle-income seniors, those with higher incomes may still experience a reduction in their benefits. Fortunately, the earnings test limits increase annually, providing the potential to retain more of your benefits in the future.
In conclusion, understanding how the earnings test can impact your Social Security benefits is crucial for planning your retirement income. By being aware of the thresholds and limits set by the test, you can make informed decisions about when to claim your benefits and how to maximize your income in retirement.
