Can I Retire at 66 and Still Work?

Working past typical retirement age is common. Understanding how continued employment affects income, taxes, and healthcare is key.

Working and Social Security Benefits

For individuals born between 1943 and 1954, full retirement age (FRA) for Social Security is 66. Reaching FRA changes how earned income impacts benefits.

Before full retirement age, Social Security benefits may be reduced if earnings exceed an annual limit. In 2025, the Social Security Administration (SSA) deducts $1 from benefits for every $2 earned above $23,400 if you are under FRA for the entire year. This earnings test applies to wages or net self-employment earnings.

In the year an individual reaches full retirement age, a different earnings limit applies. For 2025, the limit is $62,160, with $1 in benefits deducted for every $3 earned above this threshold before reaching FRA. Once full retirement age is reached, there is no earnings limit, and benefits are not reduced.

Withheld Social Security benefits are not permanently lost. The SSA recalculates and increases your monthly benefit amount once you reach full retirement age, accounting for withheld benefits. Working can also increase future Social Security benefits if your latest year of earnings is one of your highest 35.

Taxation of Earned Income and Social Security

Earned income (wages or self-employment) is subject to federal income tax and FICA payroll taxes, which fund Social Security and Medicare.

For employees, FICA taxes consist of a 6.2% Social Security tax and a 1.45% Medicare tax on wages. The Social Security portion applies up to an annual wage base limit, which is $176,100 in 2025, while the Medicare portion has no wage limit. Self-employed individuals are responsible for both the employee and employer portions of these taxes, totaling 12.4% for Social Security and 2.9% for Medicare, applied to 92.35% of their net earnings. An additional Medicare tax of 0.9% applies to wages exceeding $200,000 for individuals or $250,000 for married couples filing jointly.

Social Security benefits may be subject to federal income tax based on “combined income.” This is calculated by adding adjusted gross income, non-taxable interest, and half of your Social Security benefits. Earned income contributes to this calculation.

Federal tax thresholds determine the taxable portion of Social Security benefits. For individual filers, if combined income is between $25,000 and $34,000, up to 50% of benefits may be taxed. If combined income exceeds $34,000, up to 85% of benefits may be taxed. For those filing a joint return, up to 50% of benefits may be taxed if combined income is between $32,000 and $44,000, and up to 85% if it exceeds $44,000. If combined income falls below these lower thresholds, Social Security benefits are not subject to federal income tax.

Most states do not tax Social Security benefits, though a few may, often with their own thresholds or exemptions. Earned income is subject to state income tax in states that impose one.

Medicare Enrollment While Working

Medicare eligibility begins at age 65. Most individuals qualify for premium-free Medicare Part A (hospital insurance) if they or their spouse paid Medicare taxes for at least 10 years. Enrolling in Part A when first eligible is advisable, even if still working, as it is free.

Individuals working past age 65 with employer-sponsored health coverage may delay Medicare Part B (medical insurance) and Part D (prescription drug coverage) without penalty. This is permissible if the employer has 20 or more employees, as their plan serves as primary payer. If fewer than 20 employees, Medicare becomes primary, requiring Part B enrollment at age 65 to avoid gaps.

Upon termination of employment or employer health coverage, individuals qualify for a Special Enrollment Period (SEP). This 8-month period allows enrollment in Medicare Part A and Part B without late enrollment penalties. For Medicare Part C (Medicare Advantage) and Part D (prescription drug coverage), the SEP is shorter, usually two months. Health coverage from COBRA, retiree benefits, or severance packages does not qualify as current employment for delaying Medicare without penalty.

Higher earned income can impact Medicare premiums through the Income-Related Monthly Adjustment Amount (IRMAA), an additional charge for Part B and Part D for higher incomes. The Social Security Administration determines IRMAA based on modified adjusted gross income (MAGI) from tax returns two years prior. For 2025 Medicare premiums, 2023 income levels are used. In 2025, individuals with MAGI exceeding $106,000, or joint filers over $212,000, will pay an IRMAA surcharge.