For annuity producers and advisors
A client claimed Social Security early and kept a part-time job. Their question is a fair one: will Social Security take my check away? The answer depends on what kind of income is coming in.
Before full retirement age, Social Security runs an annual earnings test. SSA says that when it works out how much to deduct, it counts only the wages from a job or, for someone self-employed, net profit. Bonuses, commissions and vacation pay are included.
SSA also lists what it leaves out: pensions, annuities, investment income, interest, veterans benefits, and other government or military retirement benefits. An annuity payment sits on the household’s income map, and the earnings test does not read it.
SSA’s planner page still shows the 2026 limits. The 2027 limits come from SSA’s 2027 COLA fact sheet.
| Situation | 2026 limit | 2027 limit | Withholding above the limit |
|---|---|---|---|
| Under full retirement age all year | $24,480 | $25,560 | $1 for every $2 |
| The year the person reaches full retirement age (earnings before the birthday month only) | $65,160 | $67,920 | $1 for every $3 |
| Beginning the month full retirement age is reached | No limit | ||
Hypothetical example, 2027. A client is under full retirement age all year and receives $1,000 a month ($12,000 for the year). They earn $31,560 in wages, which is $6,000 above the $25,560 limit.
SSA withholds $1 for every $2 above the limit: $3,000, so $9,000 of the $12,000 is paid.
The same client also receives $18,000 of annuity payments. Under the earnings test those dollars add nothing to the $31,560, so the withholding stays at $3,000.
The test is one rule among several. Income tax on benefits and Medicare premiums work from their own definitions of income, and this page does not cover them.
Withheld benefits are not forfeited. SSA says that when the person reaches full retirement age, it recalculates the benefit amount to give credit for the months it reduced or withheld benefits because of excess earnings. Beginning with the month full retirement age is reached, earnings no longer reduce benefits, however large they are.
In that year the limit is higher and the withholding rate is $1 for every $3. SSA counts only the earnings up to the month before the person reaches full retirement age, not the whole year.
There is also a special rule for the first year of benefits. If the person has retirement benefits for only part of the year and earns more than the yearly limit, SSA pays a full benefit for any whole month it considers them retired, whatever the yearly earnings. For survivors benefits, SSA applies the full retirement age for retirement benefits when it runs the test.
For a producer, the useful move is a one-page household income map: wages and self-employment profit on one side, annuity payments, pensions and interest on the other, and the months in which each applies. A client who feared losing a check to an annuity they own can see that the earnings test reads only the wage side.
It also gives the client a way to plan the part-time work. Knowing the limit, and that the withheld months are credited back at full retirement age, turns a vague worry into a number they can work against.
No. SSA says that when it figures how much to deduct from benefits it counts only wages from a job or net profit from self-employment, and that it does not count pensions, annuities, investment income, interest, veterans benefits, or other government or military retirement benefits.
For a person under full retirement age all year, $25,560, with $1 withheld for every $2 above it. In the year the person reaches full retirement age, $67,920 for the months before that birthday month, with $1 withheld for every $3 above it. There is no limit beginning with the month full retirement age is reached. Source: SSA 2027 COLA fact sheet.
SSA says that at full retirement age it recalculates the benefit amount to give credit for the months it reduced or withheld benefits because of excess earnings.
No. Beginning with the month a person reaches full retirement age, SSA says their earnings no longer reduce benefits, no matter how much they earn.
Sources
Educational material, not tax or legal advice. Dollar examples labeled hypothetical are simple arithmetic on the rules above, not figures for any real client.
