Here’s a rule that trips up a lot of people, even smart ones.
If you start collecting Social Security before you hit full retirement age (FRA) and you’re still working, the government actually reduces your benefits based on how much you earn. It’s called the Retirement Earnings Test, and yes, it’s exactly as annoying as it sounds. Earn too much before FRA, and Social Security holds back some of your money.
But here’s the thing — that rule has an expiration date.
Once you reach full retirement age, the earnings test ends completely. You can work unlimited hours, earn unlimited money, and Social Security won’t touch a single dollar of your benefits. Full retirement age right now is 66 and 10 months for people born in 1959, and 67 for anyone born in 1960 or later.
There’s also a silver lining for people who got hit by the earnings test earlier. When you reach FRA, Social Security recalculates your benefits upward to give you credit for the months they previously reduced your payments. So it’s not just gone — some of that money actually comes back to you over time.
This matters even if retirement feels like a lifetime away. Understanding how this system works helps you — or someone you love — make smarter decisions about when to claim, when to keep working, and how not to leave money on the table.