The upside of working in retirement
The additional income that comes with part-time work can help boost savings and increase financial and physical well-being
We need to be financially prepared for 100-year lives. That puts a spotlight on the savings you've built up since they need to last for that longer life.
— Cynthia Hutchins,
director of Financial Gerontology, Bank of America
The idea of retirement has long conjured up images of leisure and travel, but a majority of workers also see the value in continuing to collect a paycheck.
While only 29% of today's retirees do some work for pay, a whopping 75% of pre-retirees expect to work after they officially retire.Footnote 1
For some, it may be about the money. Seven in 10 workers and more than half of retirees are concerned inflation will force them to make substantial cuts to their retirement spending.Footnote 1 Collecting a paycheck could provide a financial buffer. For others, the benefits may be physical, as post-retirement work has been linked to improved health.Footnote 2 For many, working in retirement serves as an opportunity to find new interests and pursue different opportunities.
With some companies adopting remote work as the norm, the ability to do your job from anywhere could provide even more incentive to continue working in retirement. If you're considering doing so, asking yourself the following questions could help you better understand what the extra income might mean for your finances.
Previous slide
Next slide
If you're considering earning income after you retire, you may want to discuss these questions with a financial advisor or tax professional.
Consider using it first to cover expenses so you can delay drawing down your savings and retirement assets. The extra money may also allow you to pursue new goals, such as philanthropy, or put you in a position to leave more for your heirs.
Your benefits may be reduced temporarily if you work and collect Social Security before your full retirement age (66 or 67, depending on what year you were born).Footnote 3
Review the Medicare rules carefully to make sure you won't be penalized if you decide to delay signing up because your job offers benefits or you're covered under a spouse or partner's plan. Once you reach age 65, a higher income can affect your Medicare premiums.Footnote 4
Your earnings could push you into a higher tax bracket. And if you're already claiming Social Security benefits, as much as 85% of your Social Security income could be subject to federal (and possibly state) income taxes.Footnote 5
Question: How long will I need my retirement assets to last?
At age 65, life expectancy for a man is 82 and a half years; for a woman the same age, it's more than 85 years.Footnote 3 "We need to be financially prepared for 100-year lives," says Cynthia Hutchins, director of Financial Gerontology at Bank of America. "That puts a spotlight on the savings you've built up since they need to last for that longer life."
Question: Can working in retirement increase the chance that I won't outlive my money?
There are a couple of key financial benefits of working in retirement. First, there's a greater likelihood that you can put off collecting Social Security. Until age 70, for every year you delay past your full retirement age — 66 or 67, depending on the year you were born
Footnote 3 — your benefit will rise
by 8%.Footnote 4 So if you're thinking about starting to claim at 66 or 67, remind yourself that each year you can wait to claim will earn you an 8% "raise." By contrast, claiming your benefits at age 62 could cut your
Social Security income by as much as 30%.
There's also this not-inconsiderable advantage: By generating income from a part-time job, you may be able to put off dipping into your retirement savings, allowing your investments more time to grow. When the time does come to draw down your savings, you may find that you can increase your spending rate as a result. Beginning withdrawals at a later age may enable you to create a bit more of a cushion, which could potentially allow you to pursue things you might not otherwise have been able to do, and perhaps also be able to give more to future generations.
Question: Is there any downside to the extra income?
Before taking on part-time work in retirement, think about consulting with a financial advisor and tax professional to help weigh all these considerations. And start that planning early, says Ben Storey, director, Retirement Research & Insights, Bank of America. "The time to do that is five to 10 years before retirement. Then revisit it as you approach retirement — and at any point when your circumstances change."
Footnote 1 EBRI and Greenwald Research, "2025 Retirement Confidence Survey."
Footnote 2 BMC Public Health, "Is working in later life good for your health? A systematic review of health outcomes resulting from extended working lives," July 2021.
Footnote 3 Social Security Administration, "See your Full Retirement Age (FRA)," accessed June 2025.
Footnote 4 Social Security Administration, "Receiving Benefits While Working," accessed June 2025.
Footnote 5 Social Security Administration, "Must I pay taxes on Social Security benefits?," accessed June 2025.
MAP8367450-03152027