What is the earnings test? How does the earnings test work? How are benefits withheld? What counts as earnings (and what doesn’t)? How Social Security pays you back What is the ‘special earnings limit rule’? Does the earnings test affect my family?

How Work Affects Your Benefits , Social Security Administration Receiving Benefits While Working , Social Security Administration Program Explainers: Retirement Earnings Test , Social Security Administration The Earnings Test (ET) , Program Operations Manual System, Social Security Administration Exempt Amounts Under the Earnings Test , Social Security Administration “What types of income do NOT count under the earnings test?” Social Security Handbook, Social Security Administration Special Payments After Retirement , Social Security Administration Special Earnings Limit Rule , Social Security Administration

The Retirement Earnings Test: How Work Can Affect Social Security

Your monthly payments may be temporarily reduced if you have a job or income from self-employment

6-minute read

Part of Series: Retirement Benefits

Tamara E. Holmes and Andy Markowitz,

AARP

Expert reviewed by

Tom Margenau

Published October 12, 2026

Tamara E. Holmes is a Washington-based writer and editor. She has written extensively about money, entrepreneurship and careers for more than two decades. Her work has appeared in such publications as USA Today, Working Mother and Essence.

Andy Markowitz is an AARP senior writer and editor covering Social Security and retirement. He is a former editor of the Prague Post and Baltimore City Paper.

Key takeaways

Social Security’s retirement earnings test affects people who claim retirement benefits early — before full retirement age — but still work.
Affected beneficiaries may have a portion of the Social Security payments withheld if their work earnings exceed annual limits.
Benefit reductions are temporary because Social Security recalculates payments at full retirement age to account for benefits previously withheld.

Working while getting Social Security retirement benefits may seem like a great way to increase your income. But before you take that part-time job or start that new business, you need to know about the retirement earnings test. Otherwise, you may find yourself giving up more than you gain — at least in the short term.

What is the earnings test?
How does the earnings test work?
How are benefits withheld?
What counts as earnings (and what doesn’t)?
How Social Security pays you back
What is the ‘special earnings limit rule’?
Does the earnings test affect my family?

Here’s the bottom line: If you start Social Security before reaching full retirement age (FRA) and continue working, or if you file and then go back to work, you could lose some of your monthly benefits, depending on how much you earn. But the test is temporary, and once you pass FRA, Social Security adjusts your benefit amount so that over time, you recoup what was withheld.

Here’s what you need to know about working while collecting Social Security.

What is the earnings test?

The earnings test is a cap on income for people who claim Social Security early (before FRA) and are still working for pay. If you earn above the cap, Social Security withholds a portion of your benefit payments.

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Why? Social Security was designed to provide a guaranteed income for older adults who have retired from work. If you can still work, the thinking went, you’re not fully retired. The test has evolved to reflect older Americans’ changing work habits — it used to be in force until age 70, but now ends at FRA.

How does the earnings test work?

The earnings test is adjusted annually to reflect national wage trends. But it’s not the same for everyone — it differs depending on how close you are to full retirement age.

If you are receiving benefits and working in 2026 but are not due to hit FRA until 2027 or later, the earnings limit is $24,480. If you earn more than that, you lose $1 in benefits for every $2 earned over the cap.

Say you are 65, collect $2,000 a month in Social Security and take a part-time job that pays $35,000 a year — $10,520 over the limit. Social Security will deduct $5,260 from your payments. Instead of receiving $24,000 in benefits for the year, you’d get $18,740.

But suppose that job is full-time and pays $75,000 a year. The deduction would be $25,260 (half of the difference between $24,480 and $75,000), wiping out your Social Security for the year.

The test gets less stringent in the calendar year you reach full retirement age. In this case, the earnings limit is $65,160, and the benefit deduction is $1 for every $3 earned over the limit. That applies until the month you hit FRA; from then on, there is no benefit reduction, no matter how much you earn. In fact, Social Security increases your monthly benefit at that point so that over time, you recoup benefits you lost to the prior withholding.

Social Security’s online earnings test calculator can help you estimate how much your benefits will be reduced if you work after claiming.

How are benefits withheld?

There are two ways that the Social Security Administration (SSA) determines how much to adjust payments: Data it gets from W-2s and tax returns, and self-reporting by beneficiaries. If you expect your income to exceed the limit, call Social Security at 800-772-1213 to report your estimated earnings.

You can update the estimate at any time if your work situation changes. Do so promptly: If you received more in benefits than you were entitled to due to incorrect income information, you’ll have to pay them back through the SSA’s overpayments process.

Based on your income data, the SSA will determine your earnings test deduction, but it doesn’t reduce your payment by a set amount each month. Instead, it holds off on sending your full payment for as many months as it takes to “repay” the $1-for-$2 benefit withholding.

Let’s suppose again that you’re 65, have a $2,000 monthly benefit, and lose $5,260 to the earnings test. That works out to about 2.6 months’ worth of benefits. The SSA generally does not make partial payments, so they will round that up and withhold your payment for three months. (You can request a partial payment for the final month by filing a protest with the SSA, verbally or in writing. Otherwise, the difference will be refunded in the following year.)

Having recouped the $5,260, they’ll resume making your Social Security payment for the rest of the year. If it subsequently turns out they withheld too much, the SSA will repay you; If they didn’t withhold enough, you’ll have to repay them, as noted above.

What counts as earnings (and what doesn’t)?

The earnings test applies only to income from work. That includes bonuses, commissions and vacation pay, the SSA says. If you work for someone else, your gross wages count toward the earnings test. If you’re self-employed, your net earnings will be used.

Income from nonwork sources such as rental properties, lawsuit payments, inheritances, unemployment benefits, pensions, investment dividends, retirement account withdrawals and interest will not reduce benefits. The SSA also does not count capital gains — profits you make when you sell investments or assets such as stocks, bonds, homes or cars.

There are also certain special payments that don’t count. These are payments for work you did before you retired that you might receive afterward — for example, severance pay, bonuses, back pay, payment for unused vacation time or sick leave, and deferred compensation, such as stock options. Even if you receive the money after you start collecting benefits, Social Security treats it as connected to work done prior to your retirement.

If you were self-employed, net income you receive in the year after you start Social Security for services you performed before you began collecting benefits counts as special payments.

How Social Security pays you back

Once you’re past full retirement age, Social Security resets your benefit amount so that over time you recoup the earnings test deductions. Here’s an example of how it works.

Say you turn 62 in 2026 and claim Social Security. Your monthly benefit is $1,400, and you earn $30,000 a year from a part-time job. For the year, Social Security withholds $2,760 from your payments (half of the $5,520 that exceeded the earnings limit). That works out to about two months of benefits lost.

Now, suppose you continue to lose two months of benefits a year until you turn 67, your full retirement age. That’s 10 months of withheld benefits. When you hit FRA, Social Security will reset your benefit as if you’d filed 50 months early rather than 60. (The difference, if you’re keeping score, is that you get 70 percent of your “full” benefit at 60 months early, 74.2 percent at 50 months.)

What is the ‘special earnings limit rule’?

The special earnings limit rule is an exception to the retirement earnings test that generally applies in the calendar year in which you start receiving Social Security. The reason for the rule is that the SSA bases the earnings limit on a full year’s income, but it recognizes that most people retire at some point in the middle of the year — and by then, you have already earned more than the limit.

Rather than count that income and reduce your benefits accordingly, Social Security applies a “monthly earnings test”: Once you claim your benefits, you’ll get your full payment for any month that Social Security considers you to be “retired” (doing limited or no paid work), regardless of your total earnings for the year.

Say you earn $30,000 from January to September 2026, then start Social Security in October. For the rest of the year, Social Security will consider you retired for any month in which you earn no more than $2,040 (one-twelfth of $24,480 — the earnings limit for 2026) and do not perform what Social Security deems “substantial services” in self-employment.

In October, November and December, Social Security will pay your full retirement benefit unless you exceed the monthly cap. Say you do so in November; Social Security would apply the $1-for-$2 withholding and count your income for the year, including the $30,000 you made before. That means you would not receive a benefit payment for November. (If you stay under the monthly limit in October and December, you’ll receive your full amount; the special rule switches on and off monthly.)

Social Security can only use the special monthly rule in one calendar year. Starting the next year, income-related deductions from benefits are based solely on your annual earnings.

Does the earnings test affect my family?

It could. If your spouse or children are receiving family benefits on your work record, a portion of their payments could be withheld, too, based on your work income exceeding the earnings cap. Their benefits could also be reduced if they are working: In most cases, the earnings test applies to family and survivor benefits on the same terms as for retirees.

But Social Security does not pool family members’ incomes in applying the earnings test. Even if you and your spouse file taxes jointly, their income does not count against your earnings limit or yours against theirs. The SSA is only interested in how much you make from work while receiving benefits.

The key takeaways were created with the assistance of generative AI. An AARP editor reviewed and refined the content for accuracy and clarity.

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