How the withholding works
If you are under full retirement age for all of 2026, the exempt amount is $24,480. Above that, the Social Security Administration withholds one dollar of benefits for every two dollars you earn over the limit.
In the calendar year you actually reach full retirement age, a much more generous rule applies to the months before your birthday month: the limit rises to $65,160 and the withholding rate drops to one dollar for every three dollars over. From the month you reach full retirement age onward, the earnings test disappears entirely. You can earn any amount with no effect on your benefit.
Only earned income counts — wages and net self-employment profit, including bonuses, commissions and vacation pay. Pension income, IRA and 401(k) withdrawals, annuities, interest, dividends and capital gains are all ignored by this test.
The part that changes the decision
Withheld benefits are not confiscated. When you reach full retirement age, the SSA recalculates your benefit upward to credit you for the months in which payments were withheld. You get the money back through a permanently larger monthly check for the rest of your life.
That reframes the whole thing. The earnings test is not a penalty on working. It is a forced, temporary delay of your claim — and since delaying increases your benefit anyway, it isn't the disaster it appears to be. People who stop working or turn down hours to stay under the limit are usually making themselves poorer for nothing.
Withholding happens in whole months, not small deductions. The SSA doesn't shave a bit off each payment. It stops your checks entirely until the withheld amount is covered, then resumes. Budget for zero-benefit months rather than smaller ones.
The special first-year rule
If 2026 is your first year of both claiming and working, a monthly test can apply instead of the annual one. In any month where you earn $2,040 or less and don't perform substantial self-employment services, you receive that month's full benefit — even if your total for the year is far above the annual limit. This exists to protect people who retire mid-year after a full salary from January to June.
Does the earnings test apply to survivor and spousal benefits?
Yes. It applies to retirement, spousal and survivor benefits alike when claimed before full retirement age. It's a common surprise for widows and widowers claiming at 60 while still working full time.