While many individuals opt for Social Security benefits to retire from their jobs, not everyone intends to stop working upon receiving these benefits.
Retirement jobs can actually offer numerous advantages, like daily structure and opportunities for socializing. And, let’s be honest, if you’re looking to supplement your Social Security income, extra earnings can make a significant difference.
When you reach your full retirement age—67 for those born in 1960 or later—you’re free to earn whatever you like without any impact on your benefits. However, before reaching that age, Social Security imposes an earnings test.
Looking ahead, it’s possible these earnings test rules might shift in 2027. Here’s a glimpse of the current landscape.
Current Earnings Test Overview
Right now, under the earnings test, if you earn over $24,480 and haven’t reached full retirement age, you lose $1 in benefits for every $2 earned above that threshold. But if you’re set to reach full retirement age by the end of the year, the rule changes to losing $1 for every $3 earned above $65,160.
Don’t worry too much about those withheld benefits; they’re not permanently lost. When you hit full retirement age, those withheld amounts should be returned to you through increased Social Security checks.
Potential Changes to the Earnings Test in 2027
The earning limits for Social Security typically adjust annually alongside wage growth, so by 2027, you might find yourself with a bit more flexibility regarding your earnings before benefits are withheld.
Exact figures for 2027 are still unclear, but the Social Security Administration will likely release updated data around the time of the cost-of-living adjustment announcement on October 14.
Stay Aware of New Limits
Once the new earning limits come out, it’s essential to pay attention if you wish to avoid the inconvenience of having benefits withheld. Remember, only income from work counts against you in this scenario.
Many retirees earn money from various sources, like retirement plans, or investments, and these won’t affect your benefits. It’s the money you make from employment that you need to keep an eye on.
That said, don’t let Social Security’s earnings test dissuade you from working. Just stay informed about the rules and limits—I think knowing what to expect can really help you manage your finances and enjoy the benefits of working without too much added stress.
