What Happens if I Work After 65? A Complete Guide

According to a 2025 study, a growing number of Americans are choosing to remain in the workforce past their traditional retirement age. For those nearing this milestone, understanding exactly what happens if I work after 65 is crucial for informed decision-making.

Quick Summary

Working after age 65 can provide valuable financial and personal benefits, but it also impacts Social Security, Medicare premiums, and overall tax liability. Your specific situation depends on factors like your full retirement age, income level, and whether you receive employer-sponsored health coverage.

Key Points

• Boosted Social Security: Working past your full retirement age increases your monthly Social Security benefits up to age 70 through delayed retirement credits.

• Medicare Considerations: If you have employer coverage from a company with 20+ employees, you can likely delay Medicare Part B without penalty.

• Increased Tax Liability: Earning additional income can increase your overall tax bill and potentially make a higher percentage of your Social Security benefits taxable.

• Non-Financial Rewards: Many people work longer for a continued sense of purpose, social connection, and mental engagement, leading to a healthier aging process.

• Balance is Key: Weigh the financial gains and psychological benefits against potential drawbacks like less free time and added stress to find the right balance for your retirement.

• Know Your Employer: The number of employees at your company affects how your employer coverage and Medicare work together.

The Social Security Impact

Continuing to work past age 65 can positively impact your Social Security benefits, especially if you delay claiming them. Working before your full retirement age can lead to reduced benefits if your earnings exceed an annual limit, though this rule changes in the year you reach full retirement age and disappears afterward. Working longer also adds more years of earnings to your record, potentially increasing your benefit amount as the Social Security Administration (SSA) uses your highest 35 years of earnings for calculation and automatically recalculates benefits annually. Delaying Social Security past your full retirement age also earns delayed retirement credits, increasing your monthly benefit by about 8% per year until age 70, enhancing your lifetime income.

Navigating Medicare While Working

While turning 65 makes you eligible for Medicare, your work status affects your enrollment choices and whether you can postpone Part B premiums. For employers with 20 or more staff, you can typically delay Medicare Part B without penalty, with your employer plan as primary coverage. You can enroll in premium-free Part A and use a Special Enrollment Period for Part B when employment ends. If your employer has fewer than 20 employees, Medicare usually becomes your primary insurance, and delaying enrollment in Parts A and B might result in lifelong late penalties. Coordinating coverage is essential, and resources like the National Council on Aging (NCOA) can help you compare plans. Delaying all parts of Medicare is necessary if you want to keep contributing to a Health Savings Account (HSA).

Tax Implications of Working Past 65

Working longer can significantly alter your tax situation. Earning additional income, especially when combined with Social Security, can raise your combined income above thresholds where a portion of your Social Security benefits becomes taxable, potentially up to 85%. Increased earnings can also place you in a higher federal income tax bracket. Additionally, you'll continue paying FICA taxes (for Social Security and Medicare) on your earnings, contributing to your record but also reducing your take-home pay.

Non-Financial Benefits and Downsides

Working past 65 offers non-monetary benefits like a continued sense of purpose, mental engagement, and social interaction. The structure of a job can help prevent boredom and isolation, and some studies even associate working longer with a longer life. However, staying employed can mean less time for personal interests and family. The added stress and time commitment may not be worthwhile for everyone, potentially impacting quality of life. Personal priorities are key in this decision.

A Financial Comparison: Work vs. Full Retirement

Feature	Work After 65	Retire at 65 (Full Retirement Age)
Social Security	Increases up to age 70 via delayed retirement credits.	Claim benefits immediately at the full rate.
Medicare	Must coordinate with employer plan. May be able to delay Part B to avoid premiums.	Enroll in Parts A and B during Initial Enrollment Period.
Taxes	Higher potential income and Social Security taxes due to increased combined income.	Lower potential income taxes, but Social Security benefits may still be taxed depending on other income.
Savings	Continued contributions and growth without withdrawals.	Begin withdrawing from savings and retirement accounts.
Income	Steady paycheck plus potential benefits.	Fixed benefits (Social Security, pension) plus withdrawals.

Conclusion: Making the Right Decision for You

There is no one-size-fits-all answer to what happens if I work after 65. The decision involves balancing your financial needs, health, personal passions, and lifestyle goals. Working longer offers significant financial perks, like larger Social Security checks and extended investment growth, alongside important psychological benefits. However, it also comes with increased tax complexity and potential trade-offs in free time and stress. Consider consulting with a financial advisor and reviewing official resources, such as those from the Social Security Administration, to create a plan that best fits your unique circumstances. Ultimately, the best path is the one that aligns with your vision for a healthy and fulfilling senior life. You can explore more about your specific Social Security options at the official website https://www.ssa.gov/benefits/retirement/planner/whileworking.html.

Frequently Asked Questions

Will my Social Security benefits be reduced if I work past 65?

Not if you have already reached your full retirement age. The earnings test only applies to those who are younger than their full retirement age. Once you reach full retirement age, you can earn any amount without a reduction in your benefits.

Do I have to sign up for Medicare at 65 if I'm still working?

It depends on the size of your employer. If your employer has 20 or more employees, you can often delay enrolling in Medicare Part B without penalty. If your employer has fewer than 20 employees, you will likely need to enroll at 65.

Can working longer increase my Social Security payout?

Yes, for two main reasons. First, you can delay receiving benefits, earning valuable delayed retirement credits. Second, higher-earning years of work can replace lower-earning years in the SSA's calculation, resulting in a higher monthly benefit.

How will working after 65 affect my taxes?

Your additional income could push you into a higher tax bracket, increasing your overall tax liability. It could also cause a higher percentage of your Social Security benefits to become taxable, depending on your combined income level.

What happens if I work past 65 and already receive Social Security?

If you're past your full retirement age, your earnings will not reduce your benefits. If you are under full retirement age, your benefits may be temporarily reduced if your income exceeds the annual earnings limit.

Is there a financial penalty for delaying Medicare Part B?

You can delay enrolling in Part B without penalty if you have employer-sponsored coverage from a company with 20 or more employees. Once that coverage ends, you will have a Special Enrollment Period to sign up.

What are some non-financial benefits of working after age 65?

Many people find that working longer provides a sense of purpose, intellectual stimulation, and important social connections. It can also offer structure and routine, leading to better mental and physical well-being.