Don’t Get Caught by the Social Security Earnings Test

If you’re planning to claim Social Security before your full retirement age (around 66 or 67) but still want to keep working part-time, you need to know about the Earnings Test. 

The Earnings Test is a rule that can reduce your benefits if you earn above a certain amount. For 2025, that limit is $23,280 per year, and it adjusts annually for inflation. If your income goes over this, the government holds back part of your Social Security checks.  This rule applies until you hit your full retirement age. At that point, you can make as much as you want without impacting your Social Security check. 

Why does this matter?

If you’re easing into retirement with some work on the side – maybe picking up a few shifts or consulting – going over that limit could mean smaller Social Security checks than you expected. That might force you to pull more from your savings or 401(k) earlier than planned, which could shorten how long your nest egg lasts. Understanding the Earnings Test helps you avoid surprises and make smarter choices about when to claim benefits or how much to work.

Here’s the good news

Even if you have run into this unexpectedly and your benefits have been reduced, the money withheld won't be  gone forever. Social Security recalculates your benefits later to give you credit for what was held back. 

Knowledge is power here. The Earnings Test is one of those rules that’s easy to overlook but can mess with your retirement budget if you’re not ready.