Income Limits That Can Temporarily Reduce Social Security
Many people claim Social Security in retirement, and use an additional source of income to cover their expenses since they no longer receive a paycheck. You can also start getting your paychecks and continue working – although you may end up with lower benefits.
That’s because Social Security will withhold a portion of each benefit if your income is above a certain limit. This reduction only occurs until you reach full retirement age. Here’s what you need to know.
How Social Security withholding is calculated
In 2026, the Social Security Administration will withhold part of your benefits if you’re younger than full retirement age — 67, if you were born in 1960 or later — and you earn more than $24,480 a year. Once you reach full retirement age, no more deductions are made, and the administrator recalculates your benefits, increasing them to the number of months withheld.
If you are under full retirement age, you will have $1 deducted from your Social Security benefits for every $2 you earn above the limit. In the year you reach full retirement age, you only get a $1 deduction for every $3 you earn above the alternative limit, which is $65,160 in 2026.
Because your monthly benefit increases after full retirement age, you may end up receiving a lump sum of Social Security income for the rest of your life, depending on how long you live.
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Estimate your income to avoid unnecessary deductions
The amount of holding that occurs is proportional to your income. Chances are that if you’re still working, you’re earning more than the $24,480 limit, especially if you’re working a full-time job. While you can switch to part-time work to lower your salary and reduce your withheld benefits, you may need to delay Social Security and stay in full-time work, especially if you need that source of income to make ends meet.
You can also plan to access your Social Security benefits when you’re ready to retire. Working while collecting Social Security can also make a large portion of your benefits taxable if your combined income rises above certain limits.
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Use the SSA wage assessment calculator
A Social Security income check calculator can help you decide about how much of your benefits will be withheld, if any. You can provide your working income and see if it exceeds the annual limits. Then, the calculator will show how much of your benefits will be withheld from each paycheck, or whether you won’t face any deductions.
The income test also has higher income limits. The limit is adjusted each year for inflation, which can result in a lower withholding amount in future years, assuming your income remains the same.
It’s worth noting that pensions, interest and investment gains are not included in your income tax assessment.
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