You may already know that claiming Social Security before your full retirement age (FRA) -- 67 for most people today -- can reduce your benefits by up to 30%. This increase is typically permanent, but there are a few exceptions.
One of the most common applies to seniors who work while claiming Social Security early. This can cost them in the short term, but it can also lead to notable long-term gains.
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The Social Security earnings test is a little-known rule that withholds money from seniors who claim Social Security before their FRA if they earn more than a certain amount from their job. In 2026, the earnings test withholds $1 from your checks for every $2 you earn over $24,480 if you're under your FRA all year. If you'll reach your FRA in 2026, you only lose $1 for every $3 you earn over $65,160 if you earn this much before your birth month.
Fortunately, that money isn't gone forever. The Social Security Administration recalculates your benefit when you reach your FRA. If you had money withheld due to the earnings test in years past, your checks will increase. The boost could be substantial if you'd lost entire checks to the earnings test before.
Still, for some, the short-term losses may outweigh the long-term gains. The only way to avoid the earnings test is to keep income from your job to a minimum. Luckily, this should get a bit easier in future years, because the Social Security Administration increases the earnings test limits annually.
