As more Americans redefine what retirement looks like, many are choosing to continue working even after they begin receiving Social Security benefits. Whether it’s for additional income, personal fulfillment, or simply a desire to stay active, the decision to work while collecting benefits is increasingly common — but it comes with important financial and legal considerations.
Key Takeaways
- Working while collecting Social Security may increase your lifetime benefits but can lead to temporary reductions if you claim early.
- Taxes, Medicare enrollment, and overall retirement planning must be factored into your decision.
- A thoughtful strategy tailored to your unique situation can help you maximize both your income and your benefits.
The Upside: Financial and Lifestyle Benefits
Boosted Income:
Social Security benefits alone may not be enough to meet today’s cost of living. Continuing to work can provide essential supplemental income, help delay withdrawals from retirement accounts, and increase financial stability.
Higher Future Benefits:
Social Security calculates your monthly benefit using your 35 highest-earning years. If you’re still working and earning more now than you did earlier in your career, those higher earnings could replace lower-earning years in the calculation — permanently increasing your benefit.
Mental and Social Engagement:
Work isn’t only about money. Many older adults find that staying in the workforce helps maintain a sense of purpose and provides valuable structure and social interaction, all of which contribute to better mental health.
The Downsides: Know Before You Earn
Temporary Benefit Reductions:
If you begin collecting Social Security before your full retirement age (FRA), your benefits may be reduced based on how much you earn. For example, in 2025, your benefits will be reduced by $1 for every $2 you earn above $23,400. The good news? Once you reach FRA, your monthly benefit will be recalculated to give you credit for the months when benefits were withheld.
Tax Consequences:
Earning too much could make a portion of your Social Security taxable. If your combined income exceeds $34,000 (individuals) or $44,000 (married filing jointly), up to 85% of your benefits could be subject to federal income tax.
Medicare Implications:
Working beyond age 65 may affect when you need to enroll in Medicare. While Part A is typically premium-free, failure to enroll in Part B and D on time — depending on your employer’s coverage — can lead to penalties. Higher income may also result in increased Medicare premiums.
Is Working While Collecting Right for You?
Consider working if you:
- Enjoy your job and want to stay active
- Need extra income to support your lifestyle
- Are in good health and expect to live well beyond retirement age
You may want to delay benefits if you:
- Are earning significantly more than the annual limits
- Wish to avoid taxation of your benefits
- Want to maximize your future Social Security payout
Plan Ahead with Professional Guidance
Whether you’re already collecting Social Security or planning to retire soon, it’s important to consider how continued employment affects your financial picture. Benefit reductions, taxes, and Medicare are just part of the equation — your long-term goals and personal circumstances matter just as much.
Our Elder Law attorneys work closely with individuals and families to craft customized plans that reflect their unique needs, values, and long-term goals.