Hailey
If you’re thinking ahead to retirement or how working now might affect your future pension, then this article is for you. Big names like Dave Ramsey and AARP are sounding a warning about how continuing to work while taking Social Security benefits can change the money you get.
Let’s break it down in simple, clear language so you understand what it means — even if retirement seems far away.
When Can You Start Receiving Benefits?
You can begin collecting Social Security retirement benefits as early as age 62. However, choosing when you claim those benefits affects how much you receive.
Why Working While Receiving Benefits Matters
Income limits before full retirement age
If you take Social Security early and continue to work, there are important rules to know:
- Your full retirement age (FRA) is usually 67 for people born in 1960 or later.
- If you haven’t reached FRA and you earn above a certain amount, your monthly benefit can be reduced.
For 2026:
- Before reaching FRA, you’ll have $1 deducted for every $2 earned above $24,480.
- In the year you reach FRA, until you hit the FRA month, the rule is $1 deducted for every $3 earned above $65,160.
Here’s a table to make this clearer:
| Year | Situation | Threshold Income | Deduction Rule |
|---|---|---|---|
| 2026, before FRA | Working and collecting early benefits | $24,480 | $1 benefit cut for every $2 earned above threshold |
| 2026, year you reach FRA, before your FRA month | Working and collecting benefits | $65,160 | $1 benefit cut for every $3 earned above threshold |
| After you reach FRA | Working while collecting | No limit | No deduction from benefits |
What Counts as “Earnings”?
Not all income affects the limit. According to Dave Ramsey:
- Counted income = from work.
- Not counted income = pensions, government or military retirement, investments, interest, capital gains.
So if you keep working a job and earn wages, that matters for the limit. But if your money comes from a pension or investment, it usually doesn’t affect the Social Security deduction rule.
What Happens to the Benefits That Are Withheld?
If your benefit is reduced because you earned too much, the money is not lost forever.
When you reach full retirement age, Social Security will re-calculate your benefit.
The amount you lost earlier will be added back in, making your monthly payment higher than it would have been otherwise.
Special Rules for Disability Benefits
If you’re receiving Social Security Disability Insurance (SSDI), the rules differ because the program is for folks who can’t work due to a serious illness or disability.
- For 2026, the “substantial gainful activity” limit for most SSDI recipients is $1,690 per month.
- For those eligible due to blindness, the limit is $2,830 per month in 2026.
If earnings go above these limits, SSDI benefits may end.
Should You Claim Social Security Early?
Dave Ramsey suggests that claiming early can be a good idea — in certain situations:
- If your health is not good, so you might not have many years of work ahead.
- If you don’t rely on Social Security for daily expenses and can invest or use the money wisely.
However, if you’re in good health and depend on Social Security, then continuing to work and waiting to claim may be the smarter option.
Key Takeaways
- You can work while receiving Social Security, but if you claim early and continue earning, a part of your benefit may be withheld.
- Earnings limits apply until you reach your full retirement age.
- The withheld portion isn’t lost — the benefit is recalculated at FRA to compensate.
- Disability benefits have separate rules.
- Decide when to claim based on your health, income needs, and work plans.
Understanding how working affects your Social Security benefits is important—especially if you plan to claim early or continue working into your later years.
The rules are clear: earnings above certain limits before your full retirement age reduce monthly payments, but those withheld amounts are added back later.
Whether you’re young and just thinking ahead or approaching retirement age, knowing these details helps you make better decisions about when to claim Social Security and how your work choices matter.
With good planning, you’ll be in a stronger position to use your benefits wisely and confidently.
FAQs
What happens if I earn a salary over the threshold and take Social Security early?
If you earn more than the allowed limit and take benefits early, part of your monthly Social Security payment will be reduced. But the money isn’t gone forever — it will be added back when you reach full retirement age.
Does investment income or pension affect the earnings limit for Social Security?
No — only income from work counts toward the earnings test. Money from pension, investments, interest, or capital gains typically does not trigger a reduction.
Once I reach full retirement age, does the earnings limit still apply?
No — after you reach your full retirement age, the earnings limit stops. You can work and earn without worrying about Social Security benefit reductions.