You can keep working after retiring at 62 and collecting Social Security. No law stops you. But two things happen once you do: if your wages or self-employment income top $24,480 in 2026, Social Security temporarily withholds part of your check, and the decision to file at 62 itself permanently reduces your monthly benefit to roughly 70% of what you would have received at full retirement age.1Social Security Administration. Retirement Age and Benefit Reduction
The Permanent Cut for Claiming at 62
Full retirement age for anyone born in 1960 or later is 67. Claim five years early at 62, and your monthly benefit drops to about 70% of the full amount.1Social Security Administration. Retirement Age and Benefit Reduction That reduction is permanent. Cost-of-living adjustments still apply on top of the reduced figure, but the underlying cut stays with you for life.
If your full benefit at 67 would be $2,000 per month, filing at 62 brings it to roughly $1,400. The scale slides: claiming at 63 costs less than 62, and so on up to 67. This is separate from anything that happens because you keep working. The 30% cut is the price of filing early, not the price of earning income.
The 2026 Earnings Limit and How Withholding Works
Once you are collecting benefits before full retirement age, the retirement earnings test applies. For all of 2026, if you stay under full retirement age the entire year, you can earn up to $24,480 with no effect on your Social Security payments.2Social Security Administration. Determination of Exempt Amounts Above that, Social Security withholds $1 in benefits for every $2 you earn over the limit.3Social Security Administration. Receiving Benefits While Working
On a monthly basis, the annual figure works out to $2,040.2Social Security Administration. Determination of Exempt Amounts The withholding is temporary. When you reach full retirement age, Social Security recalculates your monthly benefit to credit you for the months when payments were withheld, resulting in a higher check going forward.3Social Security Administration. Receiving Benefits While Working The recalculation is automatic. Over time, the higher payments are designed to roughly offset what was withheld, though how long that takes depends on your earnings history.
What Income Counts, and What Doesn’t
Only earned income counts against the limit. That means gross wages from a job or net earnings from self-employment. Several common income sources are excluded entirely:
- Pensions from private or government retirement plans
- Investment income, including dividends, interest, and capital gains
- Annuity payments
- Inheritances
If your retirement income comes primarily from investments, pensions, or savings, the earnings test will not touch your Social Security check no matter how large those payments are.
Employees vs. Self-Employed
For employees, Social Security counts gross wages, meaning the amount paid before taxes and deductions. For the self-employed, the agency uses net earnings after business expenses and the deductible portion of self-employment tax. Someone with $50,000 in gross revenue and $30,000 in expenses would have $20,000 counted.
Self-employed beneficiaries also face a substantial services test. Devote more than 45 hours a month to your business and Social Security considers you to be performing substantial work regardless of income. Fewer than 15 hours a month is automatically non-substantial.4Social Security Administration. Code of Federal Regulations 404.447 – Evaluation of Factors Involved in Substantial Services Test Between those two figures, the determination depends on the nature of the work and whether the business requires highly skilled labor.
The Special Rule for Your First Retirement Year
If you retire partway through the year, you may already have earned more than the annual limit from your pre-retirement job. Social Security handles that with a one-time monthly rule during your first year of retirement. Instead of looking at total annual earnings, the agency looks at each month and pays your full benefit for any month your earnings are $2,040 or less in 2026 and you are not performing substantial self-employment work.5Social Security Administration. Special Earnings Limit Rule
The monthly test only applies once, usually the year you first claim. From the following January onward, only the annual limit matters.
What Changes at Full Retirement Age
The year you turn 67 gets a more generous rule. In 2026, the limit rises to $65,160 for the months before you reach full retirement age, and the withholding rate drops to $1 for every $3 above that threshold.6Social Security Administration. What Happens if I Work and Get Social Security Retirement Benefits Social Security counts only earnings up to the month before you reach full retirement age.
Starting with the month you reach full retirement age, there is no earnings limit at all. You can earn any amount and your benefits will not be reduced.3Social Security Administration. Receiving Benefits While Working The earnings test is entirely a pre-full-retirement-age rule.
Reporting Your Earnings, and What Happens If You’re Overpaid
If you work while collecting benefits before full retirement age, keep Social Security informed about your expected earnings. Give an estimate at the start of each year or when you start a new job, and update the agency promptly if your income changes. You can report by calling 1-800-772-1213, visiting a local office, or writing to the agency. At year-end, Social Security reconciles your estimate against the actual earnings on your tax forms.
Inaccurate estimates cause overpayments, and overpayments have to be repaid. If Social Security determines it paid you more than you were owed, you get an overpayment notice with at least 30 days to respond before collection begins. If you do not respond or repay in that window, the agency will automatically withhold 50% of your monthly benefit until the debt is cleared.7Social Security Administration. Resolve an Overpayment
You have two ways to push back. You can request a waiver if the overpayment was not your fault and repaying would cause hardship, asking Social Security to forgive the debt. Or you can file an appeal if you believe the amount is wrong or no overpayment occurred. Filing either one within 30 days of the notice pauses collection while the agency decides.7Social Security Administration. Resolve an Overpayment
Federal Taxes on Your Benefits
Working while collecting Social Security often pushes your total income high enough that part of your benefits become taxable. The IRS uses combined income, which is your adjusted gross income plus nontaxable interest plus half of your Social Security benefits, to determine how much is taxable.8Office of the Law Revision Counsel. 26 USC 86 – Social Security and Tier 1 Railroad Retirement Benefits
For individual filers, combined income between $25,000 and $34,000 makes up to 50% of benefits taxable, and above $34,000 up to 85% may be taxable. For married couples filing jointly, the thresholds are $32,000 to $44,000 for the 50% tier and above $44,000 for the 85% tier.8Office of the Law Revision Counsel. 26 USC 86 – Social Security and Tier 1 Railroad Retirement Benefits
The taxable portion is taxed at your regular income tax rate. There is no special flat tax on Social Security. These combined-income thresholds are set by statute and not adjusted for inflation, so more retirees cross them each year as wages and prices rise. A handful of states also tax Social Security at the state level, so check your state’s rules if you live in one with an income tax.
One boundary worth flagging: Medicare premium surcharges tied to high income use the tax return from two years prior, so income you earn now can raise your Part B and Part D premiums once you enroll at 65. If you plan to keep working with significant earnings, factor that lag into your planning.