Can I Retire at 64 and Still Work?

Navigating the transition into retirement often involves a careful balance between financial security and personal aspirations. For many, retiring at age 64 while continuing to work offers both reduced hours and supplemental income. This approach, however, introduces financial complexities. Understanding the implications for government benefits and personal savings is important for informed decisions.

Social Security Benefits While Working

Claiming Social Security benefits at age 64 is an early election for most individuals, as the full retirement age (FRA) varies by birth year. For those born in 1959, the FRA is 66 and 10 months; for individuals born in 1960 or later, it is 67. Electing to receive benefits before reaching your FRA results in a permanent reduction of your monthly payment.

When you begin receiving Social Security benefits before your FRA and continue to work, your earnings can affect the amount of benefits you receive. The Social Security Administration (SSA) imposes an annual earnings limit. If your income exceeds this threshold, a portion of your benefits will be withheld. For example, in 2025, if you are under your FRA for the entire year, the earnings limit is $23,040. The SSA will deduct $1 from your benefits for every $2 you earn above this limit.

A different earnings limit applies in the calendar year you reach your FRA, but only for the months before your FRA. In 2025, this higher limit is $61,200. The SSA will deduct $1 from benefits for every $3 earned above this amount until the month you attain your FRA. Once you reach your full retirement age, the earnings limit no longer applies, and you can earn any amount without your Social Security benefits being reduced. These withheld benefits are not lost permanently.

The SSA recalculates your benefit amount once you reach your full retirement age, giving you credit for the months your benefits were withheld due to your earnings. This adjustment results in a slightly higher monthly benefit amount for the remainder of your life, effectively “paying back” the withheld benefits over time. Even if you are receiving Social Security benefits, your earned income from continued employment remains subject to Social Security and Medicare taxes, commonly known as FICA taxes.

Medicare Enrollment and Costs

Even if you “retire” at 64 and continue to work, Medicare eligibility typically begins at age 65. Most individuals become eligible for Medicare Part A (hospital insurance) without paying a monthly premium if they or their spouse paid Medicare taxes through employment for at least 10 years. Enrollment in Medicare Part B (medical insurance) and Part D (prescription drug coverage) generally involves monthly premiums.

The standard enrollment period for Medicare is the Initial Enrollment Period (IEP), a seven-month window around your 65th birthday. This period begins three months before the month you turn 65, includes the month you turn 65, and extends for three months afterward. Enrolling during this time helps avoid potential penalties for late enrollment in Part B and Part D. If you miss your IEP and do not qualify for a special enrollment period, you might have to wait for the General Enrollment Period (GEP), which runs from January 1 to March 31 each year, with coverage beginning on July 1.

Continuing to work and having employer-sponsored health coverage can provide flexibility regarding Medicare Part B enrollment. If you are covered by a group health plan through your current employment, or your spouse’s employment, you may be able to delay enrolling in Part B without incurring a late enrollment penalty. This is facilitated by a Special Enrollment Period (SEP), which typically lasts for eight months after your employment or employer coverage ends, whichever happens first. This allows you to maintain employer coverage and then transition to Medicare Part B when that coverage ends.

While Medicare Part A is generally premium-free, Part B and Part D premiums are typically deducted from Social Security benefits or paid directly. The standard Part B premium is projected to be around $179.80 per month in 2025. Higher-income individuals may pay an Income-Related Monthly Adjustment Amount (IRMAA) for both Part B and Part D. For instance, if your modified adjusted gross income (MAGI) exceeds certain thresholds, such as around $109,000 for single filers or $218,000 for married couples filing jointly in 2025, your premiums will be higher. Your continued work income could potentially push your MAGI into these higher IRMAA brackets once you enroll in Medicare.

Income and Tax Considerations

Continuing to work at age 64 while potentially drawing retirement income introduces various tax considerations. Any earned income from your employment remains subject to federal income tax, state income tax (where applicable), and FICA taxes, which include Social Security and Medicare contributions. Your employer will report your earnings to the Internal Revenue Service (IRS), and these wages will be included in your gross income for tax purposes.

A significant tax implication of combining earned income with Social Security benefits is the potential for your Social Security benefits to become taxable. The IRS uses “provisional income” to determine how much of your Social Security benefits are subject to federal income tax. Provisional income is calculated by adding your adjusted gross income (AGI), any tax-exempt interest income, and half of your Social Security benefits. If this provisional income exceeds certain thresholds, a portion of your Social Security benefits will be included in your taxable income.

For a single filer, if your provisional income is between $25,000 and $34,000, up to 50% of your Social Security benefits may be taxable. If it exceeds $34,000, up to 85% of your benefits may be subject to tax. For married couples filing jointly, these thresholds are $32,000 and $44,000, respectively. Your continued earnings from work could easily push your provisional income above these thresholds, leading to a portion of your Social Security benefits being taxed.

Combining your employment income with any withdrawals from retirement accounts, such as 401(k)s or IRAs, can further complicate your tax situation. This combined income could potentially place you in a higher federal income tax bracket than if you were solely relying on retirement income. Understanding how these different income streams interact is important for effective tax planning. Consulting a tax professional may be beneficial to optimize your income strategies and minimize your overall tax liability.

Employer-Sponsored Benefits and Retirement Accounts

Continuing to work at age 64 can significantly impact your access to and management of employer-sponsored benefits. Many employers offer health insurance, life insurance, and disability benefits to their active employees. Your continued employment may allow you to maintain eligibility for these valuable benefits, which can be more comprehensive or cost-effective than individual plans purchased on the open market, especially before Medicare eligibility at age 65.

Working also allows for continued contributions to employer-sponsored retirement plans like 401(k)s or 403(b)s. For 2025, the employee contribution limit for a 401(k) is projected to be around $23,500, with an additional catch-up contribution of $7,500 available for those age 50 and over. This extended period of contributions can significantly boost your retirement savings, particularly if your employer offers matching contributions. You can also continue to contribute to personal retirement accounts such as Traditional or Roth IRAs, with projected limits around $7,000 in 2025 and an additional $1,000 catch-up contribution for those 50 and older.

Your continued employment can also affect the timing of Required Minimum Distributions (RMDs) from your retirement accounts. Generally, RMDs begin at age 73 for most individuals. However, if you are still working for an employer and participating in that employer’s qualified retirement plan, you may be able to delay taking RMDs from that specific plan until you actually retire. This exception typically applies unless you own more than 5% of the business sponsoring the plan.

This RMD delay only applies to the retirement plan of your current employer. You would still be required to take RMDs from any other retirement accounts you hold, such as IRAs or 401(k)s from previous employers, even if you are still working. Continuing to work provides an opportunity to both save more for retirement and potentially delay drawing down some of your existing retirement assets, allowing them more time to grow.