Do You Plan to Work in Retirement?

June 2019

An increasing number of employees nearing retirement plan to work for at least some period of time during their retirement years. The obvious advantage of working during retirement is that you'll be earning money and relying less on your retirement savings, leaving more to potentially grow for the future and helping your savings last longer.

But there are also non-economic reasons for working during retirement. Many retirees work for personal fulfillment: to stay mentally and physically active, to enjoy the social benefits of working, or to try their hand at something new. The reasons are as varied as the retirees themselves. If you're thinking of working during a portion of your retirement, you'll want to consider carefully how it might affect your overall retirement income plan. For example:

  • If you continue to work, will you have access to affordable healthcare (more and more employers are offering this important benefit to part-time employees)?
  • Will working in retirement allow you to delay receiving Social Security retirement benefits? If so, your annual benefit may be higher than if you don't delay.
  • If you'll be receiving Social Security benefits while working, how will your work income affect the amount of Social Security benefits that you receive? Additional earnings can increase benefits in future years. However, for years before you reach full retirement age, $1 in benefits will generally be withheld for every $2 you earn over the annual earnings limit ($17,640 in 2019). Special rules apply in the year that you reach full retirement age.