Should I keep working part-time in retirement?

Have you been asking yourself the question ‘should I keep working part-time in retirement?‘ Retirement no longer means an automatic stop to earning income. In fact, more retirees today are choosing to work part-time, whether to stay active, maintain a sense of purpose, or simply help their finances go further.

But before jumping into part-time work during retirement, there are a few critical areas to understand. Working part-time can impact your taxes, Social Security benefits, lifestyle, and health insurance coverage. That’s why it’s so important to have a retirement income strategy that considers all these moving parts.

Let’s break it down and help you decide if working part-time in retirement is the right choice for you. 

Why More People Are Working Part-Time in Retirement

There’s no denying that retirement is changing. People are living longer, staying healthier, and wanting more flexibility and fulfillment in their golden years. A part-time job can help with that.

Common reasons retirees work part-time include:

• Supplementing retirement income
  Staying mentally and physically active
• Access to employer health benefits
• Delaying withdrawals from retirement accounts
• Social connection and a sense of purpose

But the benefits of working in retirement come with a few trade-offs—and some financial surprises if you’re not careful.

How Part-Time Work Affects Your Taxes in Retirement

Even a modest part-time income can push you into a higher tax bracket or increase the taxability of your Social Security benefits.

Here’s how it works:

• Your income from a part-time job adds to your total taxable income.
• If you’re already receiving Social Security, up to 85% of those benefits can become taxable depending on how much other income you have.
• You may also end up paying more for Medicare premiums if your income increases.

Tip: Use tax planning strategies to minimize your taxable income and manage your tax bracket. A financial advisor can show you how to balance earned income, withdrawals from retirement accounts, and timing to reduce your tax burden.

The Social Security Impact: Will Working Reduce My Benefits?

If you start drawing Social Security before your full retirement age (FRA) and earn more than the annual income limit, your benefits could be temporarily reduced.

In 2025, the income limit is $22,320.

• For every $2 you earn over the limit, $1 is withheld from your benefits.
• The year you reach FRA, the earnings limit increases, and only $1 is withheld for every $3 over the threshold.
• Once you reach your FRA, you can earn as much as you want without reductions.

Important: These reductions are not permanent. The withheld benefits are recalculated and paid back gradually once you hit full retirement age. But it’s crucial to plan for the cash flow gap in the meantime.

A well-crafted retirement plan from a financial advisor can help you make smart decisions about when to claim benefits and how part-time work fits into the picture.

Health Insurance Considerations

If you retire before age 65 and do not yet qualify for Medicare, finding affordable health insurance becomes a major concern. This is where part-time work can sometimes help.

Options to consider:

• Some part-time jobs offer group health insurance, which may be more affordable than individual plans.
• Working part-time can allow you to delay tapping into retirement funds for healthcare costs.
• If you are already on Medicare, be aware that additional income from work can affect your IRMAA (Income-Related Monthly Adjustment Amount) and lead to higher premiums.

Lifestyle Benefits of Working Part-Time

Let’s not forget the non-financial rewards of working during retirement. Many retirees say they feel more satisfied, fulfilled, and mentally sharp when they have a part-time role that keeps them engaged.

Examples of part-time retirement-friendly work:

• Consulting in your former profession
• Remote or freelance work
• Teaching, tutoring, or mentoring
• Volunteer work with a stipend
• Seasonal work or hospitality

Of course, your time is still valuable and your lifestyle should reflect the retirement you worked hard for. A part-time job should fit your energy, goals, and ideal schedule.

Working with a financial advisor can help ensure your income needs are met without giving up the freedom retirement is supposed to offer.

When Does Working Part-Time Make Financial Sense in Retirement?

You might benefit from part-time work if:

• You want to delay drawing from retirement accounts to let them grow
• You need to bridge a gap until Medicare kicks in
• You’re looking to stay active without fully committing to full-time work
• You want to fund specific retirement goals like travel or home updates

You might want to rethink part-time work if:

• The extra income pushes you into a much higher tax bracket
• It reduces your Social Security benefits significantly
• It causes you to lose out on premium subsidies for health insurance
• It disrupts your desired retirement lifestyle or leads to burnout

The bottom line: Part-time work in retirement isn’t just about earning more—it’s about how that income fits into your overall retirement plan. That’s why it’s smart to sit down with a trusted financial advisor before you make a move.

A Personalized Plan for a Flexible Retirement

There’s no one-size-fits-all answer to the question “Should I keep working part-time in retirement?” It depends on your income sources, age, goals, health, and lifestyle preferences.

A financial advisor can help you:

• Evaluate the tax impact of working during retirement
• Strategize Social Security timing and income thresholds
• Plan for healthcare costs and insurance coverage
• Maximize your income while maintaining flexibility

Have questions? Schedule a complimentary meeting with a financial advisor to go over if you should work part-time during retirement.