Working While Collecting Social Security in 2027: How the Earnings Test Works

Many people in their early 60s would like both: a little paycheck and an early Social Security benefit.

Social Security allows it. But if you are younger than full retirement age, a rule called the retirement earnings test can hold back part of your benefit for a while. Here is how it works for 2027, in plain English.

Social Security announced these figures on October 14, 2026, with the 2027 cost-of-living adjustment:

• Under full retirement age for all of 2027: the limit is $25,560 a year ($2,130 a month). SSA withholds $1 in benefits for every $2 you earn above it.
• In the year you reach full retirement age: the limit is $67,920 ($5,660 a month), and only earnings before the month you reach full retirement age count. SSA withholds $1 for every $3 above it.
• Starting the month you reach full retirement age: there is no limit.

(Source: SSA 2027 COLA Fact Sheet, https://www.ssa.gov/news/en/cola/factsheets/2027.html) For comparison, the 2026 limits are $24,480 and $65,160.

Full retirement age is 67 for anyone born in 1960 or later. (Source: SSA, https://www.ssa.gov/benefits/retirement/planner/agereduction.html)

SSA counts wages from a job or net profit from self-employment, including bonuses, commissions, and vacation pay. It does not count pensions, annuities, investment income, interest, veterans benefits, or other government or military retirement benefits. (Source: SSA, https://www.ssa.gov/benefits/retirement/planner/whileworking.html)

So a retiree living on a pension and IRA withdrawals is not affected by this test. It is about work income.

This is the part many people miss. When you reach full retirement age, SSA recalculates your benefit to give you credit for the months it withheld. Your monthly amount goes up from then on. (Source: same SSA page)

SSA also reviews each year's earnings. If a year of work is one of your highest-earning years, your benefit may be recalculated upward.

Here is a hypothetical example, not based on any real person. Ruth is 63 in 2027 and starts a benefit of $1,500 a month. She works part time and earns $35,560 for the year, which is $10,000 over the limit. SSA would withhold $5,000, one dollar for every two over. In practice, SSA usually holds back full monthly payments early in the year until that amount is covered, then squares up any difference once actual earnings are known.

If Ruth expects to go over the limit, it is wise to tell SSA ahead of time so the adjustment is not a surprise later.

In the year you retire, a special rule may help. SSA can pay a full benefit for any whole month you are considered retired, no matter what you earned earlier that year. For 2027, if you are under full retirement age, that generally means a month in which your wages are $2,130 or less and you are not performing substantial services in self-employment. (Sources: SSA, https://www.ssa.gov/benefits/retirement/planner/rule.html; SSA 2027 COLA Fact Sheet)

That matters for someone who earns a full salary through June and then retires.

"Whatever your hand finds to do, do it with your might" (Ecclesiastes 9:10, ESV). Work in your 60s can be a blessing: purpose, friendships, and a way to serve. The earnings test is not a penalty on work. It is a timing rule. The real question is whether claiming early fits your household plan.

A few questions to talk through:

1. Do we need the benefit now, or would waiting serve our family better, including a surviving spouse?
2. How much will I actually earn in 2027?
3. Will a higher income make more of our Social Security taxable? Up to 85% of benefits can be taxable, depending on income. (Source: IRS Publication 915, https://www.irs.gov/publications/p915)

If you are weighing work and Social Security together, start with the free Retirement Paycheck Readiness Scorecard at scorecard.matt25capital.com, or call our office at 620-670-9455.

• Social Security claiming guide for Christians
• Social Security timing for married couples
• The 2027 Social Security COLA after Part B

I'm Will Snodgrass, CFP®, with Matt25 Capital, serving Christian pre-retirees and retirees from our office in The Woodlands, Texas, and by video with clients nationwide. Advisory services are available only where Will is properly registered or exempt from registration.

• SSA 2027 COLA Fact Sheet https://www.ssa.gov/news/en/cola/factsheets/2027.html
• SSA press release, Oct 14 2026 https://www.ssa.gov/news/en/press/releases/2026-10-14.html
• SSA, Receiving benefits while working https://www.ssa.gov/benefits/retirement/planner/whileworking.html
• SSA, Special earnings limit rule https://www.ssa.gov/benefits/retirement/planner/rule.html
• SSA, Retirement age and benefit reduction https://www.ssa.gov/benefits/retirement/planner/agereduction.html
• IRS Publication 915 https://www.irs.gov/publications/p915
• Ecclesiastes 9:10 (ESV)