Updated

Updated · AOL · Sep 28

Claiming Social Security at 65 Cuts Benefits by 13% and Risks Earnings-Test Withholding

Updated

Updated · AOL · Sep 28

Claiming Social Security at 65 Cuts Benefits by 13% and Risks Earnings-Test Withholding

Q: Still working at 65? Which income can reduce your Social Security now, and why might the money not be lost forever?

If you claim Social Security at 65 and keep working, the income that can reduce your benefit now is earned income: wages, salary, bonuses, and net self-employment income such as freelance or consulting pay. Investment and retirement income generally do not count for the earnings test, so IRA withdrawals, pensions, dividends, interest, and capital gains do not trigger benefit withholding. Because 65 is still before full retirement age for most people born in 1960 or later, the Social Security earnings test applies. In 2026, if you are under full retirement age for the entire year, Social Security withholds $1 in benefits for every $2 you earn above $24,480. If you reach full retirement age during 2026, the higher limit is $65,160, and Social Security withholds $1 for every $3 earned above that amount before the month you reach full retirement age. The money is usually not lost forever because the withholding is temporary. Once you reach full retirement age, Social Security recalculates your benefit and gives credit for months when checks were withheld, typically through a higher monthly payment going forward. The main risk is short-term cash flow: your checks may be smaller, or even fully withheld for a time, while you are still working.

3 articles · Updated · AOL · Sep 28

Age 65 no longer carries special Social Security status: for people born in 1960 or later, full retirement age is 67, so claiming at 65 reduces monthly benefits by more than 13%.
Workers who claim at 65 can also lose checks to the 2026 earnings test, which withholds $1 for every $2 earned above $24,480 before full retirement age.
People reaching full retirement age in 2026 face a looser rule — $1 withheld for every $3 above $65,160, and only on earnings before their birthday — with withheld money later reflected in a benefit boost.
Lifetime payouts can still favor waiting: people expecting to live into their 80s or longer often collect more overall by delaying to 67 or even 70.