Social Security's Earnings Test: 3 Things You Need to Know
The Motley Fool
by newsfeedback@fool.com (Maurie Backman)February 20, 2026
AI-Generated Deep Dive Summary
Social Security plays a vital role in supporting retirees, but the program's earnings test can significantly impact those who choose to work after retirement. This rule limits the amount workers can earn while still receiving full Social Security benefits, potentially reducing payments if income exceeds certain thresholds. Understanding this rule is crucial for retirees who wish to supplement their income or continue working for leisure, as it directly affects how much they receive from Social Security.
The earnings test operates by setting an annual limit based on current average wages, which increases each year. In 2023, the limit was $67,800 for individuals under full retirement age (66 years old in most cases). Those who earn above this threshold face reduced benefits proportional to their excess earnings. For example, every dollar earned over the limit reduces Social Security payments by $1, except during the year someone turns 66, when the penalty is slightly adjusted.
While working after retirement can provide additional income and financial flexibility, it’s essential to weigh the potential trade-offs. Retirees might opt to work part-time for leisure or travel expenses, but doing so could mean lower Social Security payments. This underscores the importance of understanding how earnings affect benefits and planning accordingly. For those whose earnings fall below the limit, continuing to work can be a smart
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Originally published on The Motley Fool on 2/20/2026