Will working cut your Social Security check in 2027? The new $25,560 earnings limit could affect your monthly check — here's what retirees need to know

More Americans now start their Social Security payments while still holding a job. This is allowed, but a few rules can reduce your monthly payment if you are not aware of them.

You can begin Social Security at 62. The payment, however, can be up to 30% lower than what you would get at full retirement age (FRA). For anyone born in 1960 or later, the FRA is 67.

Waiting works the other way. If you hold off beyond your FRA, you earn delayed retirement credits. These add roughly 8% to your benefit for every year you wait, until age 70. After that, the credits stop.


AARP’s Richard Johnson says most retirees need other income as well, because Social Security alone is usually not enough to meet everyday expenses.

Working after you claim Social Security: what it means for your 2027 cheque

If you claim between 62 and your FRA and keep earning, the Social Security Administration (SSA) holds back some of your payment once your earnings cross a set limit. In general, it withholds $1 for every $2 you earn above that limit.

For 2027, the SSA has raised this limit to $25,560, up from $24,480 this year.

The rule is softer in the year you reach FRA. In 2027, the limit for that year goes up to $67,920, and it counts only the earnings made before the month you reach FRA. Once that month arrives, the earnings test ends completely.

The money withheld is not lost. You do not get it back as one lump sum, but the SSA raises your monthly benefit afterwards so that you recover the withheld amount over time. From FRA onwards, you can earn as much as you like without any cut.

Not everything counts towards the limit. Pensions, annuities, interest, dividends, capital gains and withdrawals from IRAs or other retirement accounts are left out. Only income from work is counted. If you want to check your own case, the SSA has an online calculator for this.

Why so many keep working

Demographer Bradley Schurman, author of “The Super Age”, says the system almost forces people to keep working after they claim. The 3.6% cost-of-living adjustment (COLA) for 2027, the highest in four years, will help. Even so, he says, it falls behind the price rise many retirees face.

Inflation is higher than it has been in some years. It is hitting costs that older households cannot easily cut: housing, food, insurance and healthcare.

There is also the question of savings. Many workers have not saved enough, and people are living longer, so the same savings must last more years. Schurman’s view is that Social Security can no longer be someone’s whole retirement income.

(Source: Yahoo Finance)