Social Security payments can be a crucial source of income for retirees, but what happens if you exceed the annual earnings limit? Liz Weston, a Certified Financial Planner, addresses this question in her recent article. She explains that if you start receiving Social Security benefits before reaching your full retirement age, you'll encounter the earnings test, which reduces your benefits by $1 for every $2 earned above a certain threshold. In 2026, this limit is set at $24,480. It's important to note that you can temporarily suspend your Social Security payments once you reach your full retirement age, at which point the earnings test no longer applies. However, the withheld amounts are not lost forever. Instead, they will be recalculated and added back to your benefit over time, adjusting for the potential increase you would have received had you delayed your application until full retirement age. One last opportunity to benefit from delaying your application exists. If you choose to suspend your benefit at full retirement age, you can earn delayed retirement credits, increasing your check by 8% for each year between your full retirement age and age 70. This substantial boost, combined with cost-of-living adjustments, can make the wait worthwhile for many individuals.
