Rules Are Changing in 2026 for Working While Collecting Social Security: A Step-by-Step Guide
1) Confirm which rules actually apply to you in 2026
– Identify your benefit type. This guide focuses on retirement and spousal/survivor benefits. Disability (SSDI) and Supplemental Security Income (SSI) have different work rules.
– Check your age relative to full retirement age (FRA). If you will be under FRA for all of 2026, you are subject to the standard annual earnings test. If you reach FRA in 2026, you face a higher, more lenient limit for the months before your FRA month. If you are already at or beyond FRA at the start of 2026, there is no earnings limit.
– Find your FRA. If you were born in 1959, your FRA is 66 and 10 months (you reach it in 2026 depending on your birth month). If you were born in 1960 or later, your FRA is 67 (you’ll reach it in 2027 or later).
2) Learn how the earnings test works so 2026 changes don’t surprise you
– Before FRA: Social Security withholds 1 dollar of benefits for every 2 dollars you earn above the annual limit.
– In the year you reach FRA (but before the month you reach FRA): Social Security withholds 1 dollar for every 3 dollars you earn above a higher annual limit that applies only to those months.
– After you reach FRA: There is no earnings limit and no work-related withholding.
– Withheld is not lost. Months for which your benefits are withheld are credited back at FRA via a recalculation that permanently raises your monthly benefit.
– Monthly test for first-year retirees. In the first calendar year you claim, if you retire mid-year, you may use a monthly earnings test that can allow payment for low-earning months even if your annual earnings exceed the annual limit.
3) Look up the 2026 earnings limits and monthly thresholds when they’re announced
– The Social Security Administration updates these dollar limits every year, typically in October for the following year.
– Where to check:
– ssa.gov/cola for annual updates, including the retirement earnings test limits
– ssa.gov/planners/retire/whileworking.html for details and examples
– Put a reminder on your calendar for late October 2025 to confirm the 2026 limits. Do not rely on last year’s numbers.
4) Map out your 2026 work and pay scenario in detail
– Add up expected wages from all jobs. Use your pay rate, scheduled hours, and any expected overtime or bonuses.
– If self-employed, estimate your 2026 net earnings (revenues minus allowable business expenses). The earnings test uses net self-employment income, not gross sales.
– Identify months with unusually high income (bonuses, contract payments, seasonal work). This helps you decide whether the monthly test could help in your first claim year or whether you should time the start of benefits for a low-earning period.
– Run simple projections:
– If under FRA all year: Expected withholding = (Your earnings minus the annual limit) divided by 2, if positive.
– If reaching FRA in 2026: Expected withholding on pre-FRA months = (Pre-FRA earnings minus the higher limit) divided by 3, if positive.
– Use SSA’s online earnings test calculator or speak with SSA for a personalized estimate.
5) Choose a 2026 claiming-and-working strategy that fits your numbers
– If you are under FRA all year and your earnings will exceed the annual limit by a wide margin, consider:
– Waiting to claim until a later month or year, or
– Claiming but planning for several months of benefits to be withheld upfront.
– If you will reach FRA in 2026, consider starting in or closer to your FRA month to minimize withholding.
– If this will be your first year receiving benefits and you will have uneven income, consider using the monthly test. Start your benefits in a month you expect to earn at or below the monthly threshold so you can still be paid for those months.
– If you have flexibility over timing bonuses or large invoices, coordinate with your start month to keep certain months under the monthly limit.
– Remember that delaying benefits raises your monthly payment for life, while working before FRA can trigger withholding but also may boost your future benefit if you replace a low-earning year in your 35-year record.
6) Tell Social Security your 2026 earnings estimate and set up withholding the smart way
– When you apply for benefits or if your work plans change, you will be asked for your current-year and next-year earnings estimate. Give your best estimate based on your plan and update it if reality changes.
– If SSA expects withholding, they typically stop paying full checks until the expected amount has been withheld. You can request that withholding be spread out or front-loaded; discuss logistics with SSA to avoid over- or under-withholding.
– How to report or update:
– Call Social Security at 1-800-772-1213 or contact your local office.
– Use your my Social Security account to review records and messages.
– If your actual earnings end up lower than estimated, SSA will repay any excess withheld. If higher, be prepared for an overpayment notice and repayment or future withholding.
7) Understand what income counts and what doesn’t
– Counts toward the earnings test:
– W-2 wages earned for work performed in 2026
– Net self-employment income for 2026
– Does not count:
– Pensions, 401(k)/IRA withdrawals, annuities
– Investment income (interest, dividends, capital gains)
– Rental income not tied to services you perform
– Special rules for self-employed:
– SSA looks at whether you render substantial services to the business. In monthly tests, more than 45 hours of work in a month is usually considered substantial; 15 hours or fewer is usually not. Between 15 and 45 hours can be substantial depending on the nature of the work.
– Keep time logs and detailed records of your services in case SSA asks.
8) Plan for taxes on your benefits and on your wages
– Federal taxes on Social Security benefits are based on provisional income (AGI + nontaxable interest + half of your Social Security). Working raises provisional income and may make up to 85% of your benefit taxable.
– Set up income tax withholding from your benefits (Form W-4V) or make quarterly estimated payments to avoid surprises.
– Remember Medicare income-related monthly adjustment amounts (IRMAA). Your 2026 Medicare Part B and D premiums may reflect your 2024 tax return. If your income drops due to retirement, you can file an appeal for a life-changing event with Social Security to reduce IRMAA.
9) Check your earnings record and monitor recalculations
– Log in to your my Social Security account and verify your posted earnings each year. If your 2026 earnings are missing or incorrect, submit a W-2 or tax documents to correct them.
– SSA automatically recalculates your benefit when a new year of earnings replaces a lower year in your top-35 average. Watch for notice of any increase the year after you work.
– After you reach FRA, SSA will adjust your benefit upward to credit months for which benefits were withheld before FRA. Confirm the adjustment arrives; follow up if it doesn’t.
10) Coordinate with Medicare and employer coverage if you turn 65 in or before 2026
– If you have creditable employer group health coverage, you may delay Part B without penalty; confirm with your benefits administrator in writing.
– If you lack creditable coverage, enroll in Part B during your Initial Enrollment Period to avoid lifelong penalties.
– If you claim Social Security, Part A usually starts automatically at 65. Be cautious if you contribute to an HSA; Part A retroactivity can affect HSA eligibility. Stop HSA contributions up to six months before Part A begins.
11) Factor in family benefits and special cases
– The earnings test applies to your own benefits and can also affect benefits paid to family members on your record before you reach FRA.
– Survivor and spousal benefits are also subject to the earnings test if the recipient is under FRA.
– If you receive SSDI or SSI, different work incentives and rules apply; consult SSA resources specific to those programs.
12) Reassess each fall and adjust your plan for 2026
– In October, confirm the new 2026 limits and the Social Security cost-of-living adjustment.
– Update your earnings estimate, revisit your claiming date if you haven’t started, and coordinate tax withholding.
– Document any changes and keep copies of communications with SSA.
Quick example to tie it together
– Suppose you will be under FRA for all of 2026, plan to earn above the annual limit, and you start benefits in January. Estimate your total 2026 earnings, subtract the annual limit once published, and divide by 2 to estimate how many dollars of benefits will be withheld. If the withheld amount equals, say, four months of your checks, expect not to be paid for roughly four months early in the year. Those months will be credited back at FRA through a higher monthly benefit going forward.
Key takeaways for 2026
– The formulas stay the same, but the dollar limits change annually and will be updated for 2026 in October 2025.
– You can avoid unpleasant surprises by estimating earnings, timing your start date, and coordinating withholding and taxes.
– Nothing you earn after FRA will reduce your Social Security benefits, and working can boost your benefit if it replaces a low-earning year.
This guide is general education, not personal tax or legal advice. For personalized help, contact Social Security directly or consult a qualified planner.