Earnings Test
How Social Security Reduces Benefits When Working Before Full Retirement Age
Verified against SSA POMS as of August 17, 2026
The short answer
Social Security reduces benefits by the earnings test when you work while collecting benefits before full retirement age. For those under full retirement age, benefits are reduced by $1 for every $2 earned above the annual exempt amount. In the year you reach full retirement age, the reduction is $1 for every $3 earned above the limit until the month you attain full retirement age.
Annual Earnings Limit Before Full Retirement Age
If you are under full retirement age, your Social Security benefits are reduced by $1 for every $2 you earn above the annual earnings limit. This applies even if you are not entitled to benefits during all months of the year. The reduction is applied to your full benefit beginning with the first month of entitlement, until all of the estimated excess earnings have been charged. (20 CFR 404.434, RS 02501.021)
RS 02501.021 View source ›Earnings Limit in the Year You Reach Full Retirement Age
In the year you reach full retirement age, Social Security benefits are reduced by $1 for every $3 earned above the earnings limit before the month you reach full retirement age. This limit is only applied to earnings up to the month before reaching full retirement age. (RS 02501.021)
RS 02501.021 View source ›Special Earnings Rules for First Year of Retirement
There is a special rule in the first year of retirement to prevent a full yearly earnings test if you retire mid-year with more than the yearly limit already earned. You can still receive your full Social Security payment for any whole month you are considered 'retired.' According to the Social Security Administration, you are considered 'retired' in any month your earnings do not exceed the monthly limit set by the SSA. (NL 00730.149)
NL 00730.149When the Earnings Test No Longer Applies
Beginning in the month you attain full retirement age, the earnings test no longer applies, meaning you can work and earn without reduction to your Social Security benefits for the months following this milestone. (RS 02501.021, 20 CFR 404.434)
RS 02501.021 View source ›What Counts as Earnings for the Test?
The earnings test includes wages from employment and net earnings from self-employment. For self-employment, 'substantial services' must not be performed, and the earnings should not exceed certain monthly thresholds. The test does not generally include pensions, annuities, investment income, interest, capital gains, or other government benefits.
RS 02501.021 View source ›Frequently asked
Does working after full retirement age affect Social Security benefits?
No, once you reach full retirement age, you can work without any reduction in your Social Security benefits.
What happens if I exceed the earnings limit before full retirement age?
If you exceed the annual earnings limit before full retirement age, $1 will be deducted from your benefits for every $2 earned over the limit.
How much can I earn if I'm under full retirement age?
In 2026, if you are under full retirement age for the entire year, you can earn up to $24,480 without affecting your Social Security benefits. However, if you reach full retirement age during 2026, the earnings limit is higher, allowing you to earn up to $65,160 before the month you reach full retirement age.
Can I lose benefits if I retire mid-year?
No, there's a special rule allowing full Social Security payment for any whole month you are 'retired,' regardless of yearly earnings.
What is considered 'substantial services' in self-employment?
Generally, working more than 45 hours in a month is considered providing substantial services. Conversely, working less than 15 hours typically is not. If you work between 15 and 45 hours, the SSA will assess additional factors such as the type of work you are doing, the level of responsibility it entails, and how it compares to the work you performed before retirement.