Rather than clocking out once and for all, 75% of workers think they will work for pay in retirement, according to the 2025 EBRI/Greenwald Retirement Confidence Survey.
This represents a significant increase from the current 30% of retirees who work, some by choice, others out of necessity.
As "partial retirements" become increasingly popular, it's important to understand how earning income can impact your Social Security benefits and taxes.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.
Do you want to delay Social Security benefits?
Even though you'll still be bringing in money each month, make sure to check with your financial adviser to see how much you have in your retirement accounts and how you can adjust your budget as needed.
Suppose you've started taking Social Security before your full retirement age and are still working. In that case, you'll get a reduction in your benefits if you make more than the exemption amount laid out by the Social Security Administration.
If you haven't started taking Social Security benefits but are thinking about it, there are several factors to consider.
You can start claiming benefits as early as age 62, but the longer you can afford to wait for those benefits, the larger your payments will be each month.
Earning extra income can impact those benefits as well. If you're younger than your full retirement age, you'll have $1 deducted from your payments for every $2 you earn above the limit.
For 2025, that limit is $23,400. When you reach full retirement age, $1 in benefits is deducted for every $3 you earn. In 2025, that limit is $62,160.
You'll also want to consider your health care costs. If you're eligible for Medicare but decide to stay employed, you can hold off on taking Medicare Part B and D benefits and take advantage of your company's health care plan if you work for a company with 20 or more employees.
If you work for a company with fewer than 20 employees, you'll need to apply for Medicare. In most small businesses, after age 65, your health expenses will be covered by Medicare first and any other employer-based plan second.
Generally, your employer-based insurance at a small business might not cover all your expenses.
What are my employment options?
There are several employment options to consider when planning for partial retirement.
If you want to stay with your company, see if it offers part-time options. You could reduce your hours and stay in your role, or become a mentor for up-and-coming employees who could eventually take over your current role.
Not all employers offer this option, so do your research ahead of time.
With so many work-from-home options, you could also find a new job that is less demanding or is a passion project.
You could work with your favorite non-profit in a part-time role, or get involved with a local charity that's important to you.
Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth (soon to be called Adviser Intel), our free, twice-weekly newsletter.
If starting a small business has always been your dream, this approach to retirement might be a good option.
With any new business, be aware that you might have to spend more hours than you thought to get the business off the ground.
Consider how much of your retirement funds you can reasonably spend. A financial professional can help you sort out what you need to live on and what you can put toward your new venture.
What should I plan for taxes?
Make sure the extra income you earn from working in retirement doesn't become a tax burden. If you're working and aren't bringing in enough income to live on, you might need to withdraw money from your retirement accounts, such as a 401(k) or IRA.
If you do, you'll need to pay taxes on that income as well.
If you start withdrawing from your retirement accounts before age 59½, you'll also have to factor a 10% early withdrawal penalty into your budget.
Carefully track your income and plan accordingly to make sure you're not caught off guard when tax-filing season rolls around.
Whether you decide to work during retirement or not, a financial adviser can help you navigate all your options and create a plan that fits your lifestyle. It's your retirement so you want to do what is best for you.
Related Content
- Returning to Work After Retirement? Avoid These Three Common Pitfalls
- Phased Retirement: Why Easing Into Retirement Might Be Your Best Move
- 10 Things to Know About Working in Retirement
- Best Jobs for Retirees
- Worried About Your Retirement Income? Four Questions to Ask Yourself, From a Financial Planner
-
How Prepaid Verizon Phone Service Works and When It's a Smart ChoiceExplore the differences between Verizon Prepaid and Verizon Postpaid plans—costs, perks, flexibility, and when going prepaid makes sense.
-
Try This One-Minute Test to Uncover Hidden Health RisksFinding out this little-known fact about your body could reveal your risk of heart disease and more. It's a simple, free check for healthy aging.
-
Try This One-Minute Test to Uncover Hidden Health Risks
Finding out this little-known fact about your body could reveal your risk of heart disease and more. It's a simple, free check for healthy aging.
-
Child-Free Cruises Perfect For Your Retirement CelebrationHow to find a bespoke ocean or river vacation for adults. Many of these options are smaller, charming river cruises, expeditions, or niche experiences.
-
Social Security Wisdom From a Financial Adviser Receiving Benefits HimselfYou don't know what you don't know, and with Social Security, that can be a costly problem for retirees — one that can last a lifetime.
-
Take It From a Tax Expert: The True Measure of Your Retirement Readiness Isn't the Size of Your Nest EggA sizable nest egg is a good start, but your plan should include two to five years of basic expenses in conservative, liquid accounts as a buffer against market volatility, inflation and taxes.
-
Dow Adds 472 Points After September CPI: Stock Market TodayIBM and Advanced Micro Devices created tailwinds for the main indexes after scoring a major quantum-computing win.
-
October Fed Meeting: Live Updates and CommentaryThe October Fed meeting is a key economic event, with Wall Street waiting to see what Fed Chair Powell & Co. will do about interest rates.
-
2026 Social Security COLA is 2.8%: What You Need to KnowThe SSA has announced the 2026 Cost-of-Living Adjustment (COLA), the new maximum taxable wage cap, and the earnings requirements for Social Security credits.
-
The Delayed September CPI Report is Out. Here's What it Signals for the Fed.The September CPI report showed that inflation remains tame – and all but confirms another rate cut from the Fed.
