Retirees who collect Social Security before full retirement age and keep working will be able to earn more next year before any benefits are held back. The agency’s annual earnings limit rises to $25,560 for 2027, up from $24,480 this year, and the new figure applies to wages earned starting January 1.
The limit affects people who claimed early, often at 62, and still have a paycheck. Earnings above the line do not cost them money permanently, but they can stop monthly checks for a stretch of the year, which surprises many working beneficiaries who budget around a fixed deposit.
The new 2027 earnings test amounts
Social Security published the new figures in its 2027 cost-of-living fact sheet, alongside the 3.6 percent benefit increase. There are two thresholds, and which one applies depends on how close a person is to full retirement age:
- Under full retirement age for all of 2027: $25,560 a year, or $2,130 a month, up from $24,480 and $2,040.
- Reaching full retirement age during 2027: $67,920 a year, or $5,660 a month, up from $65,160 and $5,430.
The agency’s actuaries explain on the retirement earnings test page that these exempt amounts generally rise each year with the national average wage index, which is why they move separately from the cost-of-living adjustment.
For working beneficiaries under full retirement age: The earnings test is one of the costs built into an early claim, and a six-tab calculator for claiming age, break-even and survivor benefits, alongside the 2026 earnings-test rules, lays out how the timing decision and the work limit interact in The Social Security Claiming & Family Benefits Kit.
How much Social Security holds back
For beneficiaries under full retirement age all year, the agency withholds $1 in benefits for every $2 earned above the lower limit. In the year a person reaches full retirement age, the penalty is gentler: $1 for every $3 above the higher limit, and only earnings in the months before the birthday month count.
Using the agency’s formula, a 63-year-old who earns $35,560 in 2027 would be $10,000 over the $25,560 limit, so Social Security would withhold $5,000 in benefits during the year. The withheld amount is subtracted from the year’s benefit payments, so some months’ deposits can be reduced or stopped while the earnings run over the line.
Once a person reaches full retirement age, the test stops entirely. The actuaries’ page says earnings in or after the month someone reaches that age do not count, so a worker can earn any amount from then on without losing benefits.
What counts as earnings, and what does not
The limit applies only to work income. Social Security’s publication How Work Affects Your Benefits says only wages count for employees, and only net earnings count for the self-employed.
Other income does not count toward the limit at all. The publication lists pensions, investment earnings, interest, capital gains and other government benefits as excluded. A retiree living on a pension and IRA withdrawals, with no job, is not affected by the earnings test no matter how large that income is. The one wrinkle: an employee’s own retirement-plan contribution counts if it is included in gross wages.
The first-year rule for new retirees
People who retire partway through a year often earn more than the annual limit before they stop working. A special monthly rule covers that situation. In the first year of retirement, the publication says Social Security pays a full check for any whole month a person is considered retired, regardless of total yearly earnings.
For 2027, that monthly line is $2,130, according to the fact sheet. Someone who leaves a full-time job in June and then earns $2,130 or less in each later month can receive full benefits for those months, even if January-to-June wages topped $25,560.
Withheld benefits are not lost
The earnings test feels like a penalty, but the money is not gone for good. The publication says Social Security recalculates the monthly benefit at full retirement age to give credit for months when checks were withheld, which raises the payment going forward. Full retirement age is 67 for anyone born on January 2, 1960, or later.
The bigger risk is an overpayment. A beneficiary who expects to earn more in 2027 than originally reported should tell Social Security promptly, through a my Social Security account or by calling 1-800-772-1213. If the agency pays full checks all year and later learns earnings ran over, it will ask for the money back.
Working while collecting before full retirement age
The higher 2027 limit gives working beneficiaries more room, but it does not change the underlying trade-off of an early claim: checks can be held back now and credited later, and an earnings estimate that runs low can turn into a repayment demand. Deciding whether to keep collecting, pause or wait comes down to each household’s own numbers.
The Social Security Claiming & Family Benefits Kit includes the 2026 earnings-test rules and spousal and survivor sequencing worksheets for comparing how different claiming choices play out.
Compare the claiming ages side by side in The Social Security Claiming & Family Benefits Kit.
This article was created with AI assistance and reviewed for accuracy against Social Security Administration figures and publications.
Nathaniel Cross focuses on retirement planning, employer benefits, and long-term income security. His writing covers pensions, social programs, investment vehicles, and strategies designed to protect financial independence later in life. At The Daily Overview, Nathaniel provides practical insight to help readers plan with confidence and foresight.
