Earnings Test Explained

Overview of the Social Security earnings test and what income is considered as earned income.

For individuals claiming Social Security benefits before reaching their Full Retirement Age (FRA) and who are still working, the Social Security Administration (SSA) applies the Earnings Test. The earnings test impact retirement insurance benefits, spousal benefits, and widow(er)'s benefits. 

In 2024, the Earnings Test includes two key exempt amounts. The lower exempt amount is $22,320 for those who will not reach their FRA within the year. Under the withholding rules, $1 is withheld for every $2 earned above the lower exempt amount. This applies to all months before reaching FRA. The higher exempt amount is set at $59,520 and applies to individuals in the year they reach FRA, specifically to earnings made in months prior to this milestone. In the year you attain FRA, $1 is withheld for every $3 of earnings above the higher exempt amount, up until the month you reach FRA.

It’s important to understand that these withheld benefits are not forfeited. Once FRA is reached, the Social Security Administration recalculates the monthly benefit to account for previously withheld amounts, resulting in an increased monthly benefit for the rest of the individual's life.

A worker's FRA is determined based on their date of birth.  See SSA Program Operations Manual System (POMS) RS 00615.003 Full Retirement Age.


For the Social Security Administration (SSA) earnings test, "income" specifically refers to work earnings. This includes:

  • Gross wages for services rendered, which is the pay before any deductions such as taxes, insurance, pensions, and savings bonds.
  • Net earnings from self-employment, which is the gross income from one's business minus allowable deductions for that business. If your net earnings are a loss, this loss is subtracted from your gross wages and any other net earnings from self-employment.

It's important to note that the earnings test does not count all types of income. Income that is not considered in the earnings test includes:

  • Retirement income from sources such as a 401(k), 403(b), pension plans, and other similar retirement benefits.
  • Investment income such as dividends, interest, or capital gains.
  • Any government benefit income such as Veterans Benefits, Supplemental Security Income (SSI), or benefits from other social welfare programs.

For more information on determining income and counting types of income see SSA POMS RS 02502.240 Summary of How Major Types of Remuneration Are Treated.

Earnings Test: Widow Insurance Benefit (WIB)

Jane was born in 1960. Her full retirement age (FRA) is 67. She is eligible for a full widow benefit of $2,000. If Jane were to elect the widow benefit early at age 60, her monthly benefit would be reduced by 28.5% to $1,430. Assuming Jane kept working up to age 67 and had 24 months of payments withheld due to the earnings test, her widow benefit would be adjusted up to $1,593 at FRA. This adjustment is calculated as follows:

  • Maximum widow(er)’s benefit reduction: 28.5%
  • The monthly reduction factor: .3392%.

The monthly reduction factor is determined by dividing the maximum widow benefit reduction (28.5%) by the number of months between age 60 and the workers full retirement age. (In this case 84 months.)

  • 24 payments withheld: .3392 x 24 = 8.14%
  • Instead of a 28.5% reduction of widow benefit, Jane receives a 20.36% reduction given the 24 months of payments withheld.
  • $2,000 full widow benefit (1 - .2036) = $1,592

In other words, if you have a total of 24 month withheld, it's as if you filed five years early opposed to seven years early.