You'd hoped for a big Social Security cost-of-living adjustment (COLA) for 2026 to help you combat rising costs. But then the Social Security Administration announced a 2.8% increase, which will only add about $56 per month to the average check. It's not much, and it could leave you wondering whether you ought to return to the workforce to supplement your benefits.
This is absolutely an option, but there are a couple of lesser-known Social Security rules you should know before you do. If you're not comfortable with the following, returning to work may not be the best decision for you right now.
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1. Earnings test
The Social Security earnings test withholds benefits from you if you claim benefits under your full retirement age (FRA) and earn more than a certain amount from your job. In 2025, you lose $1 for every $2 you earn over $23,400 if you're under your FRA all year. If you'll reach your FRA this year, you only lose $1 for every $3 you earn over $62,160, assuming you earn this much before your birth month.
These limits will rise to $24,480 and $65,160, respectively, in 2026. If you expect to earn more than this, you could forfeit some of your benefits next year. It's possible you could lose entire checks. But there are two pieces of good news.
First, the earnings test goes away when you reach your FRA. After that, you can earn as much as you'd like from your job, and it won't affect your benefits at all.
Second, when you reach your FRA, the government recalculates your benefit and gives you a boost to make up for what it previously withheld. The exact increase depends on how much it held back due to the earnings test in past years, but it could be pretty substantial.
Still, that may not help you much in the short term if you're losing a large chunk of your benefits to the earnings test. You may need to work more hours at your job or rely more on personal savings to make up for those lost benefits in the meantime.
2. Benefit taxes
The federal government taxes the Social Security benefits of certain seniors whose provisional income exceeds certain limits based on their marital status. This is your adjusted gross income (AGI), plus any nontaxable interest from municipal bonds, and half your annual Social Security benefit.
The table below breaks down what percentage of your benefits could be taxable at ordinary income tax rates based on your provisional income and marital status:
|
Marital Status |
0% of Benefits Taxable If Provisional Income Is Below: |
Up to 50% of Benefits Taxable If Provisional Income Is Between: |
Up to 85% of Benefits Taxable If Provisional Income Exceeds: |
|---|---|---|---|
|
Single |
$25,000 |
$25,000 and $34,000 |
$34,000 |
|
Married |
$32,000 |
$32,000 and $44,000 |
$44,000 |
Source: Social Security Administration.
These thresholds aren't indexed to inflation, so more and more people find themselves owing these taxes each year as average benefits rise and the cost of living increases. It's sometimes possible to avoid or reduce benefit taxes by relying more upon Roth savings. The government typically doesn't count withdrawals from these accounts as part of your provisional income.
When that's not possible, you'll need to budget for these taxes on your own. You can either set aside money on your own or request that the Social Security Administration withhold some money for taxes for you.
Some states tax the Social Security benefits of some of their seniors as well. If you live in one of these states, be sure to budget for state taxes too. You may want to consult an accountant who can help you get a good estimate of what you might owe. Then, decide if you're comfortable with this trade-off before you start applying for jobs.
