Key Takeaways
- Social Security will pay a full check for any month in 2027 that someone turning 67 that year earns $5,660 or less before reaching 67, whatever they earned earlier in the year.
- A worker who earns $90,000 by June, retires and claims in July would otherwise have $7,360 held back under the yearly earnings test.
- The monthly rule covers one year only, usually the first year of retirement, and only months with no substantial self-employment.
- If you can wait until the month you turn 67 to claim, the earnings test doesn’t apply to you at all.
If you’re turning 67 next year, I have what may be some very good news.
The Social Security Administration’s cost-of-living notice, published in the Federal Register on Oct. 26, sets the 2027 monthly earnings-test amount at $5,660 for people who reach full retirement age that year. So if you stop working partway through 2027 and claim before your birthday, Social Security pays a full check for any month you earn that much or less. What you made earlier in the year doesn’t count against those months.
For anyone who works a big chunk of the year and then retires a few months early, that can be worth thousands of dollars.
A summer retirement
Let’s say you turn 67 next October and plan to retire in the summer before starting Social Security. You work through June and earn $90,000 from January on. Then you stop and start your checks in July. Say they come to $2,500 a month.
Normally, that $90,000 would be a problem. You’ve earned well past 2027’s limit, and Social Security keeps an eye on the earnings of anyone who claims early.
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The yearly test, and the monthly exception
Full retirement age is 67 for anyone born in 1960 or later. If you claim before then and keep earning, Social Security holds back benefits once your earnings go over a yearly limit. SSA’s actuaries put 2027’s limit at $25,560, and SSA holds back $1 for every $2 above it. In the year you turn 67, the limit rises to $67,920, and SSA holds back $1 for every $3 above it. Once you reach 67, the test stops applying.
There’s an exception, though. For one year, usually the first year of retirement, SSA pays a full benefit for any whole month you’re retired and earn no more than a monthly limit, according to its own FAQ. You also can’t do substantial work in a business of your own that month. For people turning 67 in 2027, that monthly limit is $5,660, which is the $67,920 yearly limit divided by 12. For anyone else who claims before 67, it’s $2,130.
Your summer checks, in full
Under the yearly test alone, your $90,000 is $22,080 over the $67,920 limit. Divide that by 3, and SSA would hold back $7,360. Your July, August and September checks add up to $7,500, so you’d keep just $140 of them.
Which, yikes.
But in July, August and September you’re retired and earning nothing, so each month comes in under $5,660. Social Security pays all three checks in full. In October you turn 67, and the earnings test no longer applies to you.
Here’s how the two paths compare:
| Metric | Yearly test only | With the monthly rule |
|---|---|---|
| Held back | $7,360 | $0 |
| Paid for July-September | $140 | $7,500 |
The same goes if you keep a part-time job after June. Say it pays $3,000 a month in wages. Each of those months still stays under $5,660, so each check still arrives in full.
Plan the months before your birthday
To get those full checks, keep your earnings in each month between retiring and your birthday month at $5,660 or less, and don’t do substantial work in a business of your own in those months. Any month you go over $5,660 goes back under the yearly test.
You get this exception for one year only, usually the first year you retire. So it pays to line it up with the year you actually stop working.
Claiming before 67 also shrinks your check for life. If you can wait until the month you turn 67 to claim, the earnings test doesn’t apply to you at all.
The way I see it, a midyear retiree turning 67 in 2027 can stop worrying about the earnings test. The question left is whether those early checks are worth a smaller check for the rest of your life.
Of course, the $5,660 figure is only for people turning 67 in 2027. If you turn 67 in 2028 and retire partway through 2027, your monthly limit that year is $2,130, and any month above it goes back under the stricter $25,560 yearly test.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
