Can You Retire and Still Work a Job?

Can you retire and still work? Yes. Should you consider working in retirement? The answer depends largely on your financial needs, health and how much emotional or mental benefit you stand to gain by continuing to work once you’re retired. On the financial side, two of the biggest concerns are the potential tax implications and possible impacts on Social Security benefits.

Do you have questions about retirement planning? Speak with a financial advisor today.

Can You Work in Retirement?

Barring significant health issues or disability, nothing prevents someone from retiring from their 9-to-5 job and continuing to work. A 2024 CNBC survey found that 52% of Americans said they planned to work in some capacity even after they retire. ¹ According to the Bureau of Labor Statistics, 38% of Americans aged 65 or older worked at least part-time in 2024. ²  

Working in retirement can yield tangible benefits:

• Taking on a part-time job or starting a side business can supplement your retirement income so you can afford a more comfortable lifestyle.
• Working can help you find purpose and meaning, get out of the house and connect with other people.
• The additional income can help cover unexpected expenses, support family members or simply allow for more discretionary spending.

Additionally, working in retirement has been shown to keep the brain and body “young,” according to a Harvard research analysis. Staying physically and mentally healthy as you age may contribute to lower healthcare costs, including delaying or avoiding the need for pricey long-term care. That can help you stretch your retirement savings even further. 

The beauty of working in retirement is that there are so many ways to do it. You might get a part-time job at a local business, do gig work for companies like Uber or Instacart, or start an online business. You can choose an option that aligns with your schedule, skills and stamina. 

Can You Work in Retirement and Claim Social Security?

You can work while claiming Social Security benefits, but doing so could impact the amount of benefits you receive. Whether you see a change in your benefits depends on how much you earn and whether you’ve reached your full retirement age (FRA). Here are two things that you should consider. 

Earnings Limitations and Reductions

For workers who are younger than full retirement age and claiming benefits, there are earnings limitations set by the Social Security Administration. 

For 2025, if you are under your FRA, earning more than $23,400 annually will result in a reduction of your Social Security benefits. Specifically, for every $2 earned over this limit, $1 is withheld from your benefits. In 2026, the threshold increases to $24,480. The same $1-for-$2 deduction applies.

If you reach FRA in 2025, your new limit is $62,160, with $1 deducted for every $3 earned above the threshold. Only earnings in the months up to the month you reach your FRA are counted. In 2026, the earnings threshold for those reaching their full retirement age during the year rises to $65,160. 

Impact at Full Retirement Age

Once you reach your FRA, the Social Security Administration says that your earnings will no longer be used to reduce your benefits, and it will recalculate the amount to give you credit for the months where benefits were reduced or withheld. 

Additionally, continuing to work could have a positive effect on your benefits. If your current earnings are among your highest 35 years of income, they can replace lower-earning years in your Social Security calculation and potentially increase your monthly benefit amount.

Tax Implications of Working in Retirement

If you plan to work in retirement, here are four significant tax implications you should consider:

• Social Security taxes: If you continue to work while receiving Social Security, your benefits might be taxed based on your combined income. For example, if your combined income exceeds certain thresholds ($25,000 for individuals or $32,000 for married couples filing jointly), up to 85% of your benefits could be taxable.
• Tax bracket: Your combined income from Social Security, pensions, investments and new employment may push you into a higher tax bracket, increasing your overall tax liability. This could lead to a higher marginal tax rate on your earnings and impact other aspects of your financial plan.
• State income taxes: Retirees working part-time or full-time may need to pay state income taxes on their earnings, depending on where they live and work. Some states tax Social Security benefits and other retirement income, which can add another layer of complexity to your tax situation. Understanding the state-specific tax rules is essential for accurate tax planning.
• Required minimum distributions (RMDs): If you have retirement accounts such as a 401(k) or traditional IRA, RMDs must still be taken after reaching age 73 (age 75 if you turn 74 after Dec. 31, 2032). These distributions are taxed as ordinary income and, when combined with employment income, can significantly increase your taxable income. Failing to take RMDs can result in substantial penalties, adding to your financial burden.

Get clarity on how much you’ll need to withdraw from your IRA or 401(k). SmartAsset’s RMD Calculator makes it simple to estimate your annual distribution.

Impact on Healthcare Costs

One primary benefit of working in retirement is the potential access to employer-sponsored health insurance, which can reduce out-of-pocket expenses compared to individual plans. This can be especially advantageous for retirees under 65 who are not yet eligible for Medicare.

However, income earned from post-retirement work can also affect eligibility for certain benefits and subsidies. Higher income levels might lead to increased premiums for Medicare Part B and Part D due to income-related monthly adjustment amounts (IRMAA).

Your healthcare costs could also be higher if continuing to work in retirement takes a toll on you physically, or you get hurt on the job. If you require treatment that isn’t covered by Medicare or an employer’s plan, you may find yourself spending more out of pocket on care. An injury could also sideline you from working either temporarily or permanently, which could affect your income outlook. 

Bottom Line

Balancing retirement with work can be a rewarding opportunity, but you should also consider the financial implications. These include potential impacts on Social Security benefits, tax obligations and assessing how continued employment could affect your healthcare costs.

Tips for Retirement Planning

• A financial advisor can help you analyze retirement investments, and create a plan to grow and protect your nest egg. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Your annual Social Security payment is based on your income, birth year and the age at which you elect to begin receiving benefits. SmartAsset’s Social Security calculator can help you estimate your benefits. 

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