Social Security's Earnings Test: What Could Change in 2027

Many people claim Social Security specifically so they can stop working. But not everyone who starts getting benefits wants to stop working.

There can be benefits to having a job in retirement, like structure and social interaction. Plus, if you need to supplement your Social Security checks, the money could help.

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Once you reach full retirement age, which is 67 if you were born in or after 1960, you can earn any amount of money without negatively affecting your benefits. Prior to full retirement age, you'll be subject to Social Security's earnings test.

But the earnings test rules could change in 2027. Here's what to expect.

What the earnings test looks like now

Currently, under the earnings test, you'll lose $1 in Social Security per $2 of earnings over $24,480 if you won't reach full retirement age by the end of the year. If you will reach full retirement age by Dec. 31, you'll lose $1 in Social Security per $3 of earnings above $65,160.

"Lost" benefits in this situation are withheld from your paycheck, but not lost forever. Once full retirement age arrives, your withheld money should be repaid to you in the form of larger Social Security checks.

How the earnings test could change in 2027

The earnings test limits for Social Security tend to change every year in line with wage growth. So come 2027, you should have more leeway to earn money before having benefits withheld.

We don't know exactly how much the earnings test limits will rise in the new year. But the Social Security Administration should be sharing those updated numbers in conjunction with 2027's cost-of-living adjustment on Oct. 14.

Be mindful of the new limits

Once Social Security's new earnings test limits are announced, you should pay close attention to them if you don't want to deal with the hassle of having benefits withheld. That said, you should realize that it's only earned wages from a job that count against you in this context.

Many retirees have a variety of income streams, like retirement plan withdrawals and interest or dividends from investments. It's only money you actively earn through working that you have to worry about.

You also shouldn't necessarily let Social Security's earnings test discourage you from holding down a job. The key, rather, is to make sure you're on top of the rules and limits so there are no unwanted surprises. Withheld Social Security could throw your budget off course, but knowing what to expect could make it possible to reap the benefits of working with less stress.

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