By Christian BrinkleyLicensed NC Insurance Agent, NPN 22217190, NC Life & Health · Updated October 14, 2026 · 4 min read
Retirement does not have to mean never working again. Plenty of people keep earning, by choice or by necessity. But working while retired tangles with Social Security, taxes, and Medicare in ways that surprise people. Here is the map. This is general information, not financial advice.
Why people keep working
Some work because they want to. The job is enjoyable, the structure helps, the social contact matters. Some work because the math demands it. Savings came up short, or a late-life expense changed the plan.
Both are valid. Work in your 60s and 70s can be the difference between a tight retirement and a comfortable one. It also keeps you engaged, which has value no spreadsheet captures.
Just know the rules before you clock in.
The earnings test concept
If you claim Social Security before your full retirement age and you keep working, there is an earnings test. In plain terms: earn above a certain annual limit and your Social Security benefits get temporarily reduced.
The limit changes yearly, so check ssa.gov for the current figure rather than memorizing one. The reduction is not a tax that vanishes into the ether. When you reach full retirement age, your benefit gets recalculated to credit you for the months when benefits were withheld. You are not exactly losing the money forever, but you are not getting it now either.
How working affects your taxes
Working in retirement usually means more income, and more income usually means more tax. Obvious, but the interactions are what get people.
Your wages stack on top of your other retirement income. That can push you into a higher bracket than your retirement income alone would. It can also push more of your Social Security into taxable territory, because the taxation of benefits is based on your combined income.
How working affects Medicare: IRMAA
Here is the one that blindsides higher earners. Medicare Part B and Part D premiums are means-tested through something called IRMAA, the income-related monthly adjustment amount. Earn above certain thresholds and your premiums go up, sometimes by a lot.
The kicker: IRMAA looks at your tax return from two years ago. So income you earn at 63 sets your Medicare premiums at 65. People who have a big earnings year right before Medicare eligibility get a premium surprise in the mail.
Making work work
A few principles. First, if you will earn meaningful money before full retirement age, think hard about whether claiming early makes sense or whether you should wait.
Second, count the after-tax, after-IRMAA value of the work. A part-time job that bumps your Medicare premiums for two years might still be worth it, but you should know the full price.
Third, coordinate the moving pieces. The year you retire, the year you claim Social Security, and the year you start Medicare are three separate decisions that interact. Making them one at a time without seeing the others is how people leave money on the table.
The bottom line
Working in retirement is normal and often smart. Just understand the earnings test before full retirement age, the tax stacking that shrinks your net gain, and the IRMAA lookback that can raise your Medicare premiums two years later.
Work with your eyes open and it is one of the best retirement tools you have.
This is general information, not financial advice. Check ssa.gov for the current earnings test limits and Medicare.gov for current IRMAA thresholds.
Questions people ask me about this
Why people keep working?
Some work because they want to. The job is enjoyable, the structure helps, the social contact matters. Some work because the math demands it. Savings came up short, or a late-life expense changed the plan. Both are valid. Work in your 60s and 70s can be the difference between a tight retirement and a comfortable one.
What is the earnings test concept?
If you claim Social Security before your full retirement age and you keep working, there is an earnings test. In plain terms: earn above a certain annual limit and your Social Security benefits get temporarily reduced. The limit changes yearly, so check ssa.gov for the current figure rather than memorizing one.
What is the Social Security do-over most people miss?
If you claimed early, kept working, and now regret the timing, there are limited options. Within a year of claiming you can withdraw your application and pay back what you received, essentially resetting. After that window, the more common move is simply suspending benefits at full retirement age to earn delayed credits until 70.
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