Insights into Job Prospects during Retirement Years
Working Past Retirement Age: Boon or Bane?
As the ageing population continues to grow, working past the traditional retirement age has become a popular trend. Here's a look at the benefits and challenges of extending one's career into later years.
Financial Benefits
Working past retirement age can significantly boost retirement savings and financial security. By continuing to work, individuals can add to their savings, helping to offset longer life expectancy and inflation pressures that strain fixed retirement incomes. This is particularly important as many older Americans are not fully prepared financially for retirement.
Another financial advantage is the increase in Social Security benefits. Delaying Social Security claiming beyond full retirement age results in higher monthly benefits due to actuarial adjustments, enhancing lifetime income potential. Working longer also postpones claiming benefits, which can increase the primary insurance amount.
Challenges
While working past retirement age offers financial benefits, it also presents challenges. If individuals claim Social Security before full retirement age (67 for those born in 1960 or later) and continue working, their benefits may be reduced by $1 for every $2 earned above specified thresholds ($23,400 in 2025). After reaching full retirement age, no earnings limit applies.
Earning income while receiving Social Security might also increase Medicare Part B premiums and income taxes on benefits. The trade-off between earning additional income and loss of free time, plus commuting or work-related costs, can reduce the net benefit of working past retirement.
Impact on Government Programs
Delayed retirement generally increases benefits, improving individual financial stability and potentially easing long-term program costs. However, early claiming combined with working can trigger benefit reductions due to the earnings test. Changes in normal retirement ages influence retirement behavior; raising these ages tends to delay exits from the labor force but may reduce lifetime pension value, making workers more likely to return to work after initial retirement.
Continuing to Work
Working later can help qualify for other workplace benefits such as health insurance, dental and vision coverage, gym memberships, and other employee perks. It can also help mitigate health problems such as dementia, heart disease, and cancer.
As the unemployment rate remains at or slightly above 4%, employers are actively looking to hire and retain employees of all ages. The rise of remote and hybrid work, as well as new workplace benefits like long-term care insurance and caregiving leave, are helping to retain older workers or entice them to come back.
It's important to find a balance between work and retirement, discussing any work plans with your spouse or partner to ensure there's still time for leisure and family activities. Once you turn 73, you must take required minimum distributions (RMDs) out of your pre-tax retirement accounts.
In sum, working past the usual retirement age helps improve retirement readiness and benefits but requires careful navigation of Social Security rules and tax implications to maximize outcomes and avoid unintended losses. For those considering extending their careers, consulting, gig work, starting their own business, or volunteering could provide opportunities to continue making money while setting their own hours.
- Extending one's career into later years can lead to enhanced personal-finance, as working beyond retirement age can boost retirement savings and increase Social Security benefits, particularly for those who are not fully prepared financially.
- Continuing to work can present challenges, such as the possibility of reduced Social Security benefits if earnings exceed certain thresholds, increased Medicare Part B premiums, and income taxes on benefits, potentially offsetting the financial gains from working past retirement.
