This 2027 Social Security Change Could Help Retirees Keep More of Their Checks
Key Points
Some Social Security recipients who choose to work are subject to an earnings test.
Earning too much could result in benefits being withheld.
The earnings test limits are rising in 2027, so Social Security recipients can earn more money before a negative impact on their benefits.
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Many people stop working once they sign up for Social Security benefits. If you have savings, that money, coupled with your monthly benefits, could be enough to pay your retirement expenses in full.
But if you don't have savings, you may find that it's difficult to live on Social Security alone. And you may choose to work part-time to supplement your benefits.
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The Social Security Administration allows seniors to work while receiving benefits. And once you reach full retirement age, you can earn any amount of money without a negative impact.
If you're collecting benefits prior to full retirement age, there's an earnings test to worry about. But the rules are shifting for the better in 2027.
Social Security recipients will soon get more leeway to earn money
Social Security's earnings test dictates that there's a certain amount of money early claimants can earn each year before benefits are withheld.
In 2026, seniors who will not reach full retirement age by Dec. 31 have $1 in benefits withheld per $2 of earnings above $24,480. Those who will reach full retirement age by Dec. 31 have $1 in Social Security withheld for every $3 of earnings above $65,160.
In 2027, these limits are rising to $25,560 and $67,920, respectively. So Social Security recipients who are subject to the earnings test in the new year can at least bring home a little more money before worrying about smaller checks.
Withheld benefits are not lost forever
One big misconception about Social Security's earnings test is that if you have benefits withheld for earning too much, the money is lost forever. What actually happens is that once your full retirement age arrives, the Social Security Administration recalculates your monthly checks.
At that point, your benefits should increase as the previously withheld money is returned to you. You won't get it all in one lump sum, but your monthly checks should be bigger.
For this reason, you shouldn't let Social Security's earnings test scare you away from having a job if that's the best thing for your financial situation. Even if you temporarily lose a portion of your checks, if the earnings you bring in from a job lead to greater financial stability overall, it's worth continuing to work.
Plus, some retirees need the structure of part-time work to anchor their weeks and help maintain social connections. So if working is a good thing for you, it pays to keep doing it, even if you do have to be mindful of Social Security's ever-changing earnings test limits.
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