- Social Security announced a 2.8% COLA increase for 2026, adding about $56 per month to the average check. Returning to work may be an option, but consider Social Security rules like the earnings test that could affect your benefits. The earnings test withholds benefits if you claim under your full retirement age and earn over certain amounts. The limits will rise to $24,480 and $65,160 in 2026. Benefits can be fully restored at full retirement age, and a recalculated benefit may provide a substantial increase. Consider working more or relying on savings to make up for lost benefits.
- Social Security benefits can be taxed based on provisional income and marital status. Certain thresholds determine what percentage of benefits could be taxable at ordinary income tax rates. These thresholds are not indexed to inflation, so more people may owe taxes as benefits and costs rise. Consider Roth savings to reduce taxes or budget for them separately. Some states also tax Social Security benefits, so consult an accountant for estimates. Be aware of these taxes before applying for jobs to make an informed decision.
Read more at Nasdaq: Considering Going Back to Work? Watch Out for These 2 Things if You’re on Social Security.