Working in retirement and Social Security

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If you’ve ever imagined yourself spending your golden years entirely on the golf course or watching the sun dip into the Indian River Lagoon, you’re not alone. But for a growing number of retirees and pre-retirees on Florida’s Treasure Coast, working in retirement has become less of a financial necessity and more of a lifestyle choice — a way to stay engaged, maintain purpose, and keep the social connections that a career once provided. That said, when income from work meets Social Security benefits, the rules get surprisingly complicated, and the stakes are real enough to warrant a thorough understanding before you clock in for that first post-retirement shift.

Why So Many Retirees Are Choosing to Keep Working

The traditional picture of retirement — a hard stop at 65 and a life of leisure — has shifted dramatically over the past two decades. Today, more Americans than ever are embracing working in retirement as a deliberate, empowering decision rather than a sign of financial failure. According to the Bureau of Labor Statistics, workers aged 65 and older represent one of the fastest-growing segments of the American workforce, and that trend shows no signs of slowing down. Here on the Treasure Coast, where communities like Stuart and Port St. Lucie attract a vibrant, active population, it’s common to meet retirees who consult, teach, guide fishing charters, run boutique businesses, or take on part-time roles that keep them energized and connected.

The motivations behind working in retirement are as varied as the individuals making that choice. Some people genuinely love what they do and simply can’t imagine walking away entirely. Others find that the social fabric of a workplace — the daily conversations, the collaborative problem-solving, the sense of contributing to something larger — is difficult to replicate in leisure activities alone. Then there are practical financial reasons: stretching a portfolio further, delaying Social Security to maximize future benefits, or covering healthcare costs during the gap between leaving a full-time employer and reaching Medicare eligibility at age 65. Understanding your personal motivation matters, because it shapes how aggressively you need to manage the financial mechanics involved.

What surprises many people is how much the decision to keep earning income can interact with other elements of their financial plan — sometimes favorably, sometimes in ways that require careful navigation. This is especially true when Social Security is already in payment or is about to begin. The good news is that with the right information and a little planning, working in retirement can be structured to deliver both the lifestyle satisfaction you’re seeking and a financially sound outcome. That’s exactly what we’ll walk through in this guide.

How Social Security Works When You’re Still Earning Income

Social Security is designed to replace a portion of your pre-retirement income, and the program has built-in rules that account for the possibility of continued employment. When you begin collecting benefits while still earning wages or self-employment income, the Social Security Administration applies what’s known as the Retirement Earnings Test. This test determines whether your benefits will be reduced based on how much you earn — but it’s important to understand that “reduced” doesn’t mean “lost forever.” The SSA essentially withholds a portion of your benefits temporarily, then recalculates and increases your future monthly benefit to make up for what was withheld. It’s a nuance that gets overlooked far too often.

For anyone considering working in retirement while also collecting Social Security, the first question to answer is whether you’ve reached your Full Retirement Age (FRA). That single factor determines how the earnings test applies to you — or whether it applies at all. The Social Security Administration provides a detailed breakdown of how the retirement earnings test works at SSA.gov, and it’s worth bookmarking as a reference. The rules change meaningfully depending on your age relative to FRA, so let’s break each scenario down clearly.

It’s also worth noting that only earned income counts against the earnings test. If you have investment income, rental income, pension payments, or distributions from retirement accounts, none of that triggers the earnings test. This distinction is critically important for Treasure Coast retirees who may have a mix of income streams — a part-time consulting gig alongside dividend income from a brokerage account, for instance. Only the consulting income would factor into the Social Security calculation. Working in retirement in a way that maximizes income types can therefore be a strategic tool in your overall financial plan.

The Earnings Limit Explained: What It Means for Working in Retirement

The earnings limit is the dollar threshold above which the SSA begins withholding Social Security benefits. For 2025, if you are under your Full Retirement Age for the entire year, the SSA withholds $1 in benefits for every $2 you earn above $22,320. That number adjusts annually for inflation, so always verify the current threshold at SSA.gov before making any decisions. If you’re doing the math on your particular situation, working in retirement and earning, say, $32,320 in a given year would mean $5,000 in temporarily withheld benefits — a meaningful number that deserves attention in your cash-flow planning.

There’s a special rule that applies during the calendar year you reach your FRA. In that transitional year, a more generous limit applies: the SSA withholds $1 for every $3 earned above a higher threshold (approximately $59,520 in 2025), and only wages earned before the month you reach FRA are counted. This makes working in retirement particularly strategic during that pivotal year — you have more earning room without triggering as steep a reduction. Many people are surprised to learn about this distinction, and it creates real planning opportunities if you know it’s coming.

Here’s the piece of the puzzle that brings some relief: once you reach Full Retirement Age, the earnings test disappears entirely. You can earn any amount — whether from a part-time job in Stuart, a consulting contract, or a small business venture — without any reduction in your Social Security benefit. The SSA will also recalculate your benefit at that point to restore credit for any months benefits were withheld. So while the earnings test can feel like a penalty during the years before FRA, it’s more accurately understood as a deferral mechanism. Working in retirement before FRA may reduce your near-term Social Security income, but it doesn’t permanently diminish what you’re entitled to receive.

Full Retirement Age and Why It Changes Everything

Your Full Retirement Age is the linchpin of Social Security planning, especially if you’re thinking about working in retirement. For anyone born between 1943 and 1954, FRA is 66. For those born in 1960 or later, it’s 67. People born between those years fall on a sliding scale — for example, someone born in 1957 has an FRA of 66 and 6 months. If you’re not sure of your exact FRA, the SSA has a simple lookup tool on their website that will tell you in seconds. Knowing your FRA is foundational, because it affects everything from when you should claim benefits to how freely you can earn income without triggering the earnings test.

Claiming Social Security early — as young as age 62 — reduces your monthly benefit permanently (unless you repay benefits and withdraw your application, which has its own rules). Many people claim early with the intention of supplementing income, and working in retirement seems like the perfect complement. But this combination can backfire if you’re not aware of the earnings limits. You could find yourself in a situation where you’re receiving a reduced benefit and then having even more of it withheld because your earned income exceeded the threshold. The result can be a much smaller net Social Security check than expected during your early retirement years.

On the flip side, delaying Social Security past FRA — up to age 70 — increases your benefit by approximately 8% per year. If you’re healthy, have a family history of longevity, and are comfortable with working in retirement to bridge the income gap, delaying Social Security can be one of the highest-return, lowest-risk financial strategies available to you. Every month of delay locks in a permanently higher benefit, one that also serves as the base for cost-of-living adjustments over the rest of your life. For couples, the math becomes even more compelling when you factor in survivor benefits, since the higher earner’s delayed benefit will continue to the surviving spouse.

Taxes, Medicare, and Other Surprises to Watch For

One area that catches many retirees completely off guard is the taxation of Social Security benefits combined with earned income. Up to 85% of your Social Security benefit can become taxable if your “combined income” — which the IRS defines as your adjusted gross income, plus non-taxable interest, plus half of your Social Security benefits — exceeds certain thresholds. For individuals, that threshold is $34,000; for married couples filing jointly, it’s $44,000. Working in retirement and earning meaningful wages can easily push you above these limits, increasing the taxable portion of your Social Security income in ways you may not have budgeted for. The IRS provides a clear explanation of how this calculation works at IRS.gov.

Medicare premiums add another layer of complexity. If your income exceeds certain thresholds, you’ll pay higher Medicare Part B and Part D premiums through a surcharge called IRMAA (Income-Related Monthly Adjustment Amount). This surcharge is based on your income from two years prior, which means working in retirement at a higher income level in 2025 could affect your Medicare premiums in 2027. It’s a delayed consequence that many people don’t see coming. For Treasure Coast retirees on fixed incomes, an unexpected IRMAA surcharge can meaningfully disrupt a carefully constructed monthly budget.

Self-employment brings its own tax considerations. If you’re working in retirement as a freelancer, independent contractor, or small business owner rather than as a traditional employee, you’re responsible for paying both the employer and employee portions of Social Security and Medicare taxes — a combined 15.3% on net self-employment income up to the Social Security wage base. This doesn’t mean self-employment isn’t worth it; many retirees find it the most flexible and rewarding arrangement. But you’ll want to account for these taxes in your income planning and consider making quarterly estimated tax payments to avoid penalties. A tax professional or fee-only financial advisor can help you model these scenarios accurately.

Smart Strategies for Working in Retirement Without Leaving Money on the Table

The good news about all of these rules is that they’re predictable — and predictable rules create planning opportunities. One of the most effective strategies for people considering working in retirement is to model out multiple scenarios before making any irrevocable decisions. What happens to your total income picture if you claim Social Security at 62 versus 66 versus 70? How does your part-time income affect each scenario? Running these numbers side-by-side, preferably with the help of a qualified advisor, can reveal an optimal path that isn’t obvious at first glance. The team at The 1715 Podcast regularly explores these kinds of real-world financial planning conversations in a way that’s accessible and actionable.

Another valuable strategy involves structuring your income sources intentionally. If you’re working in retirement and have flexibility in how you pay yourself — for example, if you own a small business or have a mix of earned income and investment distributions — it may be possible to manage your combined income in a way that minimizes the taxable portion of Social Security or keeps you below an IRMAA threshold. This isn’t about hiding income; it’s about being thoughtful with timing, income type, and coordination between accounts. Roth conversions, for instance, can be strategically timed to take advantage of lower-income years before you begin earning again.

Consider also the emotional and practical value of easing into retirement rather than stopping all at once. Working in retirement on a part-time or seasonal basis — perhaps three days a week during season in a field you love — can provide the structure, income, and social connection that make the transition feel natural rather than jarring. Many Treasure Coast residents find that local opportunities abound: marine industry roles, healthcare support positions, educational tutoring, real estate, or entrepreneurial ventures tied to the region’s unique lifestyle. Building a phased retirement plan that combines thoughtful Social Security timing with strategic part-time work may serve you far better than an all-or-nothing approach.

• Know your Full Retirement Age precisely — it determines when the earnings test no longer applies to you.
• Track your earned income carefully if collecting Social Security before FRA, and notify the SSA if you expect to be significantly over or under the limit.
• Model your combined income annually to anticipate Social Security taxation and potential IRMAA surcharges.
• Consider the type of work you take on — employee vs. self-employed status affects how taxes are assessed and withheld.
• Revisit your plan each year since earnings limits and tax thresholds adjust for inflation and your own circumstances evolve.

Finding Your Balance on the Treasure Coast

Working in retirement can be one of the most rewarding decisions you make — financially, emotionally, and socially. The Treasure Coast offers an extraordinary backdrop for this chapter of life, with a community that values both leisure and contribution. Whether you’re teaching yoga in Jensen Beach, running a consulting practice from a home office in Palm City, or picking up seasonal work that keeps you connected to your professional roots, the desire to stay active and engaged is something to honor and plan around thoughtfully. The financial rules that govern working in retirement alongside Social Security benefits aren’t designed to punish you — they’re designed to balance a complex system. Understanding them puts you in control.

The most important takeaway from everything we’ve covered is that working in retirement doesn’t have to be a financial minefield if you approach it with clear information and intentional planning. Know your FRA. Understand how the earnings test works in the years before you reach it. Keep an eye on your combined income as it relates to Social Security taxation and Medicare premiums. And don’t be afraid to run the numbers on multiple scenarios before committing to a Social Security claiming strategy. The difference between a well-timed plan and a hasty decision can be tens of thousands of dollars over the course of a retirement that, for many Treasure Coast residents, could last 25 to 30 years or more.

If you’d like to explore these topics further, we’d love for you to tune into The 1715 Podcast, where we regularly discuss real-world retirement planning conversations tailored to the Florida lifestyle. And if you’re ready to look at your specific situation with a qualified advisor, don’t hesitate to schedule a consultation. Working in retirement should feel like a choice you made with confidence — not a decision you second-guessed. You’ve earned the right to make it thoughtfully.

This content is for educational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Please consult a qualified financial professional before making any financial decisions.

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