Working While Collecting Social Security? The Earnings Limit Rises in 2027

People collecting Social Security retirement benefits before full retirement age will be able to earn more from work in 2027 before the agency withholds benefits. The annual threshold rises to $25,560 for someone who remains below full retirement age throughout the year, up from $24,480 in 2026.

That is an additional $1,080 in earnings before the retirement earnings test begins reducing payments. The rule affects early retirement benefits and work income; it is not a prohibition on holding a job.

Above that threshold, Social Security withholds $1 in benefits for every $2 earned. The amount of work income over the limit determines the calculation, not the worker’s entire paycheck.

What the change looks like in dollars

Consider someone below full retirement age for all of 2027 who earns $30,000 from work. That is $4,440 above the new threshold. Applying the one-for-two rule produces $2,220 in benefit withholding for the year.

Under the 2026 threshold, the same $30,000 would be $5,520 over the limit, producing $2,760 in withholding. In this example, the higher threshold reduces the calculated withholding by $540.

Actual payment scheduling depends on the person’s benefits and circumstances. Social Security’s working-while-retired guidance also describes a special rule for the first year of retirement that can affect which monthly payments are available.

The earnings test counts gross wages and net earnings from self-employment. Social Security says it does not count income such as pensions, investment interest or capital gains for this purpose. Those distinctions matter when estimating how much work income to report.

The year full retirement age arrives has a different rule

For people reaching full retirement age during 2027, a higher threshold of $67,920 applies, up from $65,160 in 2026. Social Security withholds $1 for every $3 above that amount and counts earnings only before the month full retirement age is reached.

Starting with that month, earnings no longer reduce retirement benefits under this test. Full retirement age depends on birth year; it is 67 for people born in 1960 or later.

Benefits withheld because of work are also treated differently from a permanent deduction. At full retirement age, Social Security adjusts a worker’s retirement benefit to account for months in which benefits were withheld because earnings were too high. That can raise future monthly payments rather than return all the money as an immediate lump sum.

The annual earnings thresholds generally follow changes in the national average wage index, according to the agency. They are a separate calculation from the cost-of-living adjustment to monthly benefits.

Social Security says workers should contact the agency if they expect earnings to differ from the estimate they previously supplied. A higher or lower estimate can change the amount due during the year, rather than waiting until the agency receives later earnings records.

Using the threshold for the correct year and retirement-age category helps the agency determine which payments should be withheld before a later earnings review.

References: Exempt Amounts Under the Earnings Test | How Work Affects Your Benefits | Benefits Planner: Retirement - Receiving Benefits While Working