Social Security earnings limit when retiring at 62 with dependent children - tax impacts for 2026?
I'm planning to retire next year and need advice on the Social Security earnings test. I'll turn 62 in April 2026 and want to start collecting retirement benefits in May 2026. My concern is I'll still be working part-time at my company through December (about $31,000 for the year). I've heard there's some kind of earnings limit that might reduce my benefits? Also, I have two children (ages 14 and 16) who would qualify for benefits on my record. Does having dependent children change anything about the earnings test? I'm especially wondering if: 1. My part-time income will reduce BOTH my benefits AND their benefits? 2. Are there tax implications I should know about? 3. Does the limit change after I reach full retirement age? I'm trying to decide if I should just wait until I fully stop working in January 2027 or if it makes sense to apply earlier. Thanks for any help!
18 comments
Join the conversation
Kayla Morgan
Yes, there's definitely an earnings limit when you claim SS before your Full Retirement Age (FRA). For 2025 it's $22,320 and 2026 will likely be around $23,000 (they adjust it annually). Since you'll earn $31,000, you'll be about $8,000 over the limit. SSA withholds $1 in benefits for every $2 you earn over the limit, so they'd withhold about $4,000 from your payments. And yes, this affects your dependent children too. When YOUR benefits are withheld due to the earnings test, THEIR benefits are also affected proportionally. Also remember you'll face a permanent reduction of about 30% by claiming at 62 versus waiting until FRA.
0 coins
Saleem Vaziri
•Thank you for explaining! So if I understand correctly, both my benefits AND my children's benefits would be reduced because of my earnings? That seems like a double penalty. Do you know if this withholding is taken evenly throughout the year or all at once?
0 coins
James Maki
im in this EXACT situation right now!!!! turned 62 last month and am still working. SSA is holding my checks AND my daughters check (shes 15) until i make less. its SO FRUSTRATING!!! they take ALL the checks upfront until they think theyve taken enough, then they start paying u later in the year. at least thats what the lady told me when i FINALLY got thru on the phone.
0 coins
Jasmine Hancock
•That's exactly right. SSA typically withholds benefits entirely at the beginning of the year until they've covered the expected reduction amount, rather than taking a little each month. And yes, dependent benefits get reduced proportionally when the worker's benefits are withheld due to excess earnings. One important note though - once you reach Full Retirement Age, any benefits withheld due to the earnings test will result in a recalculation and slight increase to your monthly benefit going forward.
0 coins
Cole Roush
Wait until you stop working completely! The reduction at 62 is permanent and you'll lose some of your money anyway from the earnings limit. I waited until my FRA and I'm glad I did.
0 coins
Scarlett Forster
•That's not necessarily the best advice for everyone. While waiting until FRA does avoid the earnings test, having minor children eligible for benefits can dramatically change the calculation. Each child can receive up to 50% of the parent's PIA, subject to family maximum limits. This additional income stream might outweigh the reduction from early filing, especially considering children's benefits stop at age 18 (or 19 if still in high school). The optimal strategy really depends on the specific benefit amounts, life expectancy assumptions, and financial needs.
0 coins
Arnav Bengali
Just curious - has anyone actually tried to contact SSA directly to discuss this? I've been trying to get through on the phone for 3 weeks about a similar issue and I just keep getting disconnected after waiting on hold for hours.
0 coins
Sayid Hassan
•I was in the same boat trying to get answers about my retirement application. After getting nowhere for weeks, I discovered a service called Claimyr (claimyr.com) that got me through to an SSA agent in under 10 minutes. Totally worth it for me since I needed urgent clarification on my earnings limit situation. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU Once I got through, the agent explained exactly how the earnings test would affect both my benefits and my daughter's benefits, which saved me from making a costly mistake with my filing date.
0 coins
Kayla Morgan
Regarding the tax implications you asked about - yes, there definitely are some. Up to 85% of your Social Security benefits can be taxable depending on your "combined income" (adjusted gross income + nontaxable interest + half of your SS benefits). For 2025, if you file as an individual and your combined income is: - Below $25,000: no tax on benefits - $25,000-$34,000: up to 50% of benefits taxable - Above $34,000: up to 85% of benefits taxable These thresholds are slightly higher if you're married filing jointly. Since you'll still have substantial earnings in 2026, you'll likely have some portion of your benefits subject to income tax.
0 coins
Saleem Vaziri
•Thanks for this additional information! Between the earnings limit and the taxation, it sounds like starting benefits while still working part-time might not be as advantageous as I thought. I'm now leaning toward waiting until January 2027 when I'll be fully retired. I just hate the thought of my kids missing out on those months of benefits.
0 coins
Cole Roush
My brother tried to do what ur planning and Social Security took all his money for the first 4 months!!! And his kids didn't get anything those months either. GOVERNMENT THEFT is what I call it!!!!
0 coins
Kayla Morgan
•It's not theft - it's just how the earnings test works. The money isn't lost forever. Once you reach your Full Retirement Age, SSA recalculates your benefit amount to credit you for the months benefits were withheld. It effectively increases your monthly payment going forward. The system is designed this way because Social Security retirement benefits were intended to replace lost income when you retire. If you're still earning substantial income, the program reduces benefits accordingly.
0 coins
Jasmine Hancock
One thing I don't see mentioned yet is that the earnings test works differently in the first year you retire. If you have a clean break in employment (meaning you earn under a certain monthly limit after you "retire"), SSA can apply a monthly earnings test rather than annual. For example, if you fully retire in May 2026 and have no significant earnings after that, they would only count earnings from January-April against you. This is called the Mid-Year Retirement Grace Year Rule. In your case, since you'll continue part-time work through December, you wouldn't qualify for this exception, and they'd use your full annual earnings of $31,000 when applying the test.
0 coins
Saleem Vaziri
•This is really helpful information! So hypothetically, if I stopped working completely in May after applying for benefits, they would only look at my January-April earnings for the test? That might actually be something to consider... I need to do the math to see if that's more advantageous than working part-time through December.
0 coins
Scarlett Forster
Regarding your dependent children - the rules can be complicated, but here's what you need to know: 1. Each eligible child can receive up to 50% of your Primary Insurance Amount (PIA) - that's your benefit amount at full retirement age before any reductions or increases. 2. There's a Family Maximum Benefit (FMB) that caps the total amount all family members can receive on your record (typically 150-180% of your PIA). 3. The earnings test affects the TOTAL family benefits - if your benefits are withheld, your children's benefits are proportionally reduced. 4. Children's benefits end when they turn 18 (or 19 if still in high school). Since your children are 14 and 16 now, they'll be 15 and 17 in 2026. That means they'll only be eligible for about 3 years and 1 year respectively. This timing factor might make filing earlier more advantageous despite the earnings test reductions.
0 coins
Arnav Bengali
•So if I'm understanding this right, the family maximum means that if someone has like 4 or 5 kids, they don't all get the full 50% each? The total would be capped?
0 coins
James Maki
has anyone noticed that the rules for SS are IMPOSSIBLE to figure out?? i swear they make it complicated on purpose!!!
0 coins
Jasmine Hancock
•The complexity exists because Social Security has evolved over many decades to address various social needs and edge cases. While it can be frustrating, the program provides important protections for millions of Americans. For the original poster's situation, I'd recommend requesting a personalized benefit estimate from SSA (including potential child benefits) and perhaps consulting with a financial advisor who specializes in Social Security claiming strategies. The right decision depends on many factors including benefit amounts, tax situation, and how long the children will remain eligible.
0 coins