Can I retire at 65 and still work full time? What you need to know about Social Security and Medicare

According to the U.S. Bureau of Labor Statistics, nearly 19% of adults age 65 and older were working in 2023, reflecting a growing trend of working later in life. For many, the question is not whether to retire, but how to do it while still earning a paycheck, prompting the critical question: Can I retire at 65 and still work full time?

Quick Summary

Yes, you can work full-time after retiring at 65, but it depends on your specific age, birth year, and income level, especially regarding how your earnings affect Social Security and Medicare. Careful planning is essential to avoid benefit reductions or enrollment penalties. It offers both financial and non-financial benefits, from increased income to social engagement.

Key Points

• Check Your Full Retirement Age: The full retirement age for many is 67, not 65, which impacts how the Social Security earnings test applies to you.

• Understand the Earnings Test: If you are under your Full Retirement Age and work full-time, your Social Security benefits will be temporarily reduced if your earnings exceed the annual limit.

• Benefits are Recalculated: Any Social Security benefits withheld due to the earnings test will be credited back to you later, resulting in a higher monthly payment after you reach your full retirement age.

• Employer Size Impacts Medicare: If your employer has 20+ employees, you can likely delay Part B enrollment without penalty, but with smaller employers, you may need to enroll at 65.

• Prepare for Tax Implications: The combination of your wages and Social Security benefits could potentially increase your tax bracket and your Medicare premiums.

• Weigh the Pros and Cons: Working past 65 provides extra income and social engagement but requires careful financial planning to minimize potential penalties and tax burdens.

Understanding the Nuances of "Retiring" at 65

Retirement at age 65 is often a transitional phase rather than a complete cessation of work. Many individuals choose to continue working, sometimes full-time, while also accessing retirement benefits. Navigating this requires a clear understanding of how working impacts Social Security and Medicare.

How Your Social Security Is Impacted

Your full retirement age (FRA) is a crucial factor, determined by your birth year; for those born in 1960 or later, it is 67. Claiming Social Security benefits at 65 means you are claiming early, and your earnings can affect your benefits.

Earnings Tests and Benefit Withholding

The Social Security Administration (SSA) applies an earnings test if you are under your FRA. For 2025, if you are under your FRA for the entire year, you can earn up to $23,400. For every $2 earned over this limit, $1 is withheld from your benefits. In the year you reach your FRA, the limit is higher ($62,160 for 2025), and $1 is withheld for every $3 earned above it.

Benefit Recalculation after Full Retirement Age

Benefits withheld due to the earnings test are not permanently lost. Upon reaching your FRA, the SSA recalculates your benefit to account for the withheld amounts, potentially increasing your future monthly payments. Additionally, your annual earnings are reviewed, and higher earnings in later years can replace lower-earning years in your benefit calculation, potentially increasing your benefit amount.

Navigating Medicare While Still Working

Enrolling in Medicare at age 65 is generally an option, and if you are already receiving Social Security, you will be automatically enrolled in Parts A and B. If not, you must enroll during your Initial Enrollment Period (IEP) around your 65th birthday. Your employer's size significantly influences your Medicare choices.

Employer Size Matters

• Employers with 20 or more employees: Typically, your employer's large group health plan is primary, and you can often delay Medicare Part B enrollment without penalty.
• Employers with fewer than 20 employees: Medicare usually becomes the primary payer at 65, requiring enrollment in Parts A and B to avoid coverage gaps and potential late enrollment penalties.

Considerations for Health Savings Accounts (HSAs)

Enrolling in Medicare prevents you from contributing to an HSA. Existing HSA funds can still be used for qualified medical expenses.

The Pros and Cons of a "Hybrid" Retirement

Working full-time while receiving retirement benefits presents both advantages and disadvantages.

Advantages

Continued income enhances financial security and allows delayed withdrawals from retirement accounts. Working can also provide health and social benefits, and delaying Social Security past FRA can increase future benefits through Delayed Retirement Credits.

Disadvantages

Combining wages and Social Security can increase taxable income, potentially making benefits taxable and leading to higher Medicare premiums. Full-time work also reduces leisure time.

Comparison: Working at 65 vs. Post-FRA

Feature	Working Full-Time at 65 (before Full Retirement Age)	Working Full-Time Post-FRA (e.g., 67+)
Social Security Earnings Test	Subject to annual earnings limit. Benefits will be reduced temporarily if you exceed the limit.	No earnings limit. You can earn any amount with no Social Security benefit reduction.
Benefit Recalculation	Withheld benefits are added back to your monthly payment once you reach FRA.	No recalculation needed for withheld benefits, but your benefit may increase if new earnings are higher than a previous year.
Delayed Retirement Credits	Not applicable. You are claiming before your FRA.	Can be earned for each year you delay claiming benefits, up to age 70.
Medicare Enrollment	Must decide whether to enroll in Part B or delay based on employer size and coverage.	Can receive full benefits with no earnings test, and no late enrollment penalty if you delayed Part B correctly.

Making the Right Choice for Your Situation

Whether you can I retire at 65 and still work full time? depends on your personal circumstances. Consulting a financial advisor is recommended to understand the impact on your Social Security, taxes, and overall finances. For further details on how earnings affect Social Security, visit the SSA's official guide: How Work Affects Your Benefits.

Conclusion: A Working Retirement is Possible

Working full-time after retiring at 65 is feasible, provided you navigate the rules for Social Security and Medicare. If you are under your FRA at 65, the earnings test may temporarily reduce Social Security benefits, but these benefits are later credited back. Medicare enrollment at 65 depends on your employer's size. Consider the financial benefits, like increased income and potential for higher future benefits, alongside potential drawbacks such as increased taxes and reduced leisure time. With careful planning, a working retirement can be financially rewarding and personally fulfilling.

Frequently Asked Questions

Will my Social Security benefits be taxed if I work at 65?

If you have other substantial income, including wages from working full-time, up to 85% of your Social Security benefits can become subject to federal income tax.

Do I have to sign up for Medicare Part B if I keep working at 65?

It depends on your employer's size. If your employer has 20 or more employees and provides health insurance, you can generally delay Part B without penalty. For smaller employers, you will likely need to enroll at 65.

What happens to my Social Security benefits if I earn too much before my Full Retirement Age?

If you earn more than the annual earnings limit before your full retirement age, the Social Security Administration will temporarily reduce your benefits. However, your benefits will be recalculated for a permanent increase once you reach your FRA.

Can I keep my HSA if I continue working at 65?

Once you enroll in any part of Medicare, you can no longer make contributions to a Health Savings Account (HSA). You can, however, still use the funds in your existing HSA.

Will working past 65 increase my future Social Security benefit amount?

Yes, it can. If a year you work past 65 becomes one of your highest 35 years of earnings, the Social Security Administration will automatically refigure your benefit, which can result in a higher monthly payment.

What is the difference between my early retirement age and my Full Retirement Age?

You can start claiming Social Security benefits as early as age 62, but your Full Retirement Age (FRA) is based on your birth year. Claiming before your FRA results in reduced benefits, while delaying past your FRA increases your benefits.

What happens if I miss my Medicare enrollment period while still working?

If you fail to enroll in Medicare Part B during your Initial Enrollment Period and don't qualify for a Special Enrollment Period (usually tied to employer coverage ending), you may face a lifelong late enrollment penalty.