You might already know that claiming Social Security can result in a pretty steep penalty. Those who sign up as soon as they’re eligible shrink their checks by up to 30%, and that reduction is usually permanent.
But for some early Social Security claimers, that’s not the worst of it. They can lose even more from their checks if they earn more than a certain amount from their jobs. However, there’s actually a hidden upside to that.
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Why working a job can cost you as an early Social Security claimer
You’d think that working while claiming Social Security would give you a much larger monthly income, and it can. But this isn’t always true if you’re claiming checks before your full retirement age (FRA). This is 67 for most people. In that case, you’re subject to the earnings test.
This little-known rule withholds money from your benefits if you earn more than a certain amount from your job. In 2026, if you’ll be under your FRA all year, you lose $1 for every $2 you earn over $24,480. If you’ll reach your FRA this year, you lose $1 for every $3 you earn over $65,160 if you earn this much before your birth month.
In some cases, the earnings test can cost you entire months of benefits. This could force you to rely more heavily on income from your job or personal savings.
If you think this might be an issue for you, you may prefer to hold off on applying for Social Security benefits until you either retire or reach your FRA. After this point, the earnings test doesn’t apply, so you can make as much money as you want from your job without it directly affecting your checks. However, a high income could increase your odds of owing Social Security benefit taxes.
The upside to losing money to the Social Security earnings test
Losing Social Security benefits to the earnings test is a pain in the short term, and unfortunately, there’s no way around it other than to try to keep your income from your job to a minimum. But the good news is, the loss isn’t permanent.
The Social Security Administration recalculates your benefits once you reach your FRA, and it’ll boost your checks if you’ve lost money to the earnings test in the past. This increase could be substantial if you’ve lost most or all of your checks due to high earnings in years past.
Contact the Social Security Administration if you’re unsure how the earnings test could affect you or what kind of boost you might get at your FRA. In the meantime, adjust your expectations for your Social Security benefits and make sure you have enough other sources of retirement income to cover your living costs.
