As the years go by, more and more American seniors are finding themselves continuing to work well into their retirement years. According to the Bureau of Labor Statistics, as of 2024, 23.4% of men and 16.2% of women over the age of 65 were still employed. Many of these seniors are also collecting Social Security benefits while they work, with around 40% of individuals doing so, often for several years.
It’s important for seniors who are working and collecting benefits to understand how the rules work and what the income thresholds are for 2026. If you’re below Full Retirement Age (FRA), which is typically 66 or 67 depending on your birth year, you can earn up to $24,480 in 2026 without impacting your benefits. For every $2 you earn above this threshold, the Social Security Administration will withhold $1 in benefits.
Once you reach FRA, the earning restrictions are relaxed. In 2026, you can earn up to $65,160 before your benefits are impacted, with the SSA withholding only $1 for every $3 in earnings above this threshold. Beyond FRA, there is no income limit, and you can earn any amount without affecting your benefits.
It’s important to note that only earned income is considered for the earnings test, so passive income from sources like investments or pensions is not included. If you do exceed the income threshold and have benefits withheld, it’s not lost forever. The withheld amount can actually boost your benefits in the long run.
For example, if you start claiming benefits at 62 and continue to work part-time, the withheld benefits can result in a higher monthly check once you reach FRA. Additionally, the additional working years can also boost your benefit by replacing lower-earning years in your wage record.
While losing some benefits in the short term may impact your retirement budget, it’s essential to consider the earnings test before retiring, claiming benefits, or taking on a new job. By understanding the rules and thresholds, you can make informed decisions to maximize your Social Security benefits in the long run.
