Wages from post-retirement jobs can trigger benefit reductions for those below full retirement age, while pensions and investments remain exempt.
A $30-per-hour defense-plant job could lead to roughly $18,960 in withheld Social Security benefits in 2026 for recipients under full retirement age. The earnings test applies only to wages and self-employment income, not pensions or investments.
Social Security recalculates benefits at full retirement age, crediting withheld months to increase future payments. For those born in 1960 or later, the test ends at age 67, allowing unlimited earnings without penalties.
The rule affects retirees returning to work, particularly in high-paying sectors like defense, where prior military experience commands premium wages.