Here’s how the Social Security income test works for new retirees.
Think tank proposes capping Social Security benefits at $100,000
A Washington think tank has proposed capping annual Social Security benefits for married couples at $100,000 as a way to reduce a looming deficit in retirement trust funds.
If you receive Social Security benefits while working, some or all of your benefits may be withheld if you earn more than a certain amount. This is known as the Social Security Earnings Test.
But what happens if you quit your job midway through the year? Can I still receive Social Security benefits? What happens if I earn more than the Social Security Earnings Test limit? in front Are you quitting your job? Here’s what anyone retiring mid-year should know.
social security income test
If you’re already at full retirement age when you start collecting Social Security, you don’t need to worry. You can receive your full Social Security benefits regardless of how much you earn while working.
On the other hand, if you have not yet reached full retirement age but are still working, some or all of your benefits may be garnished if your income exceeds a certain threshold.
In 2026, two different “earnings tests” may apply.
- When you reach full retirement age rear In 2026, you can earn up to $24,480 without affecting your benefits. $1 of benefits will be deducted for every $2 you spend over that limit.
- When you reach full retirement age meanwhile In 2026, you can earn up to $65,160 ($5,430 per month) without repercussions, with $1 deducted for every $3 over the limit. Only the months before you reach full retirement age are counted.
What happens if I quit my job during the year?
Consider this scenario. If you turn 65 in June 2026, you have one year to reach full retirement age (note: full retirement age is 67 if you were born in 1960 or later). You earn $8,000 a month, or $96,000 a year, at your job. If you retire on June 1 and file for Social Security, your income for the year will be $40,000. This far exceeds the limits of the means test. So, will any benefits be withheld?
Special profit limitation rules
Fortunately, if you retire mid-year, special rules apply, known as special benefit limitation rules.
Simply put, this rule says that you can collect your full Social Security check for each month you are considered retired, regardless of your annual income. Therefore, in the situation described above, those retiring in June need not worry about their benefits being deducted, regardless of their annual gross income.
Additionally, the SSA considers you “retired” if your monthly income is $2,040 or less. In short, this means that if you keep working but drop to “part-time” status, you may still be able to collect your full Social Security benefits even if your income for the full year of 2026 significantly exceeds the limit.
The bottom line is, if you retire mid-year and haven’t yet reached full retirement age, you don’t have to worry about your benefits being garnished through a means test.
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