In some cases, a senior will indeed lose around $1,000 under the new Social Security rules. This specifically applies for those collecting Social Security who remain younger than full retirement age throughout 2027.
If the person earns:
* $25,560: No benefits would be withheld under the annual earnings test.
* $26,560: The beneficiary is $1,000 over the limit, meaning $500 in benefits could be withheld.
* $27,500: The beneficiary is $1,940 over the limit, resulting in $970 being withheld.
* $30,000: Earnings are $4,440 over the limit, producing $2,220 in benefit withholding.
Thompson said many of his clients will see the impact firsthand.
“Although their Social Security benefits are not subject to payroll taxes, their earned income is," he said. "I like to compare what they are receiving in Social Security benefits versus how much they are paying in payroll taxes so they can see the difference. I often ask them why they continue to work, and in some instances, they simply enjoy what they do.”
Are Social Security Benefits Permanently Lost?
The benefits will not be lost forever.
The Social Security Administration (SSA) says on its website that benefits withheld under the retirement earnings test are not “lost.” Once the beneficiary reaches full retirement age, the agency will increase their monthly benefit to account for the months in which benefits were withheld.
That is because at full retirement age, the SSA recalculates the person's benefit by adjusting the reduction factors originally applied to the benefit. It also reviews the earnings records of beneficiaries who continue working to determine whether their additional earnings increase their monthly benefit.
“This adjustment isn't a new tax, but rather an annual increase tied to national wage growth that allows Social Security to collect additional revenue as wages rise,
