For many people, retirement doesn’t mean completely giving up work. Some keep a part-time job to earn extra income, while others do it for social connection, routine, or a sense of purpose. Whatever the reason, working after retirement can be rewarding but it also brings financial implications. From Social Security rules to tax bills and Medicare premiums, there are important details retirees should understand before deciding to return to work.
Why Retirees Pick Up Part-Time Jobs
Not every retiree has enough savings or pension income to comfortably cover living expenses. With the rising cost of food, housing, and especially healthcare, many people look for ways to supplement their Social Security checks. According to the Social Security Administration, the average benefit in 2025 is around $1,915 a month hardly enough for most households to live on.
But money isn’t the only motivation. For some, part-time work makes the transition into retirement smoother, helping them stay busy while still enjoying more free time than a full-time job allows. It also offers valuable social interaction and mental engagement, which can help reduce feelings of isolation.
How Social Security Is Affected by Work
You can work and still receive Social Security benefits, but how much you earn may impact your payments depending on your age. If you start collecting benefits before your full retirement age (FRA), which is between 66 and 67 depending on your birth year, your benefits could be temporarily reduced. In 2025, you can earn up to $22,320 without a penalty. If you go over, Social Security will withhold $1 for every $2 earned above that amount. Once you reach your FRA, these limits no longer apply you can work as much as you like without losing benefits. Any benefits that were withheld before FRA are not gone forever; the SSA adjusts your future payments to make up for them. You can check the exact rules on the official SSA website.
Taxes Don’t Stop After Retirement
Working after retirement means you’ll still pay federal (and sometimes state) income taxes on your wages. You’ll also continue contributing to Social Security and Medicare through payroll taxes. On top of that, your earnings could make part of your Social Security benefits taxable. The IRS looks at your “combined income,” which includes your adjusted gross income, any tax-free interest, and half of your Social Security benefits. If this number is over $25,000 for individuals or $32,000 for couples, you may owe taxes on some of your benefits. At higher income levels, up to 85 percent of your benefits can be taxed. Retirees over 73 also have to take required minimum distributions (RMDs) from retirement accounts.
Medicare Costs Can Also Go Up
One area retirees often overlook is Medicare. If your income rises too much, you may have to pay extra for Medicare Part B and Part D through something called the Income-Related Monthly Adjustment Amount (IRMAA). For 2025, the surcharge starts if you make more than $103,000 as an individual or $206,000 as a couple. While many retirees with part-time jobs won’t hit these numbers, it’s worth being aware of the risk especially if you also have investment income or RMDs. You can see updated premium brackets on Medicare.gov.
The Non-Financial Upside of Working Longer
While the financial details matter, part-time work in retirement isn’t just about money. Staying active can reduce depression, keep the mind sharp, and improve overall health. A job can also create social connections and help retirees continue sharing their skills and experience. Flexible part-time roles such as consulting, tutoring, or seasonal work allow retirees to earn extra income without giving up leisure time. For many, this balance creates a fulfilling lifestyle that combines both security and enjoyment.
Planning Ahead Makes the Difference
Working after retirement can be a smart move, but it’s important to understand how it affects your Social Security, taxes, and Medicare. With proper planning, retirees can avoid surprises and make part-time work a meaningful part of their financial and personal life. Checking resources like SSA.gov
, and Medicare.gov can help you make informed choices.