How Many Hours Can You Work When Retired?

While there is no specific limit on the number of hours a retiree can work, earning income can affect various financial aspects, including Social Security benefits, income tax obligations, and Medicare premiums. This article explores how earned income can influence these areas, providing insights into the financial landscape for working retirees.

Working While Receiving Social Security Benefits

Working while receiving Social Security benefits can lead to adjustments in the benefit amount, depending on a retiree’s age and income level. The Social Security Administration (SSA) applies an “earnings test” to individuals who have not yet reached their full retirement age (FRA) and are collecting benefits. Full retirement age varies based on the individual’s birth year, typically ranging from 66 to 67 years old.

For those under their full retirement age for the entire year, a specific earnings limit applies. In 2025, if an individual earns more than $23,400, the SSA will deduct $1 from their benefits for every $2 earned over this limit. For example, if someone earns $26,000, which is $2,600 over the limit, $1,300 in benefits would be withheld.

A different, higher earnings limit applies in the year an individual reaches their full retirement age. For 2025, this limit is $62,160 for earnings accumulated in the months before reaching FRA. In this scenario, the SSA deducts $1 in benefits for every $3 earned above this limit. Once an individual attains their full retirement age, the earnings test no longer applies, meaning they can earn any amount without their Social Security benefits being reduced.

Any benefits withheld due to the earnings test are not permanently lost. Instead, the SSA recalculates the individual’s benefit amount at their full retirement age, crediting back the withheld amounts by increasing future monthly payments. The SSA focuses on a retiree’s earned income, not the number of hours worked, but higher hours generally lead to higher earnings and thus may trigger these benefit adjustments.

Income Tax Implications

Earning income in retirement has direct implications for an individual’s federal income tax liability. Wages from employment or net earnings from self-employment are subject to federal income tax, similar to how they were taxed prior to retirement. This earned income is added to other sources of income, such as pensions, distributions from retirement accounts, and investment earnings, to determine overall taxable income.

Earned income can affect the taxability of Social Security benefits. Depending on a retiree’s “provisional income,” a portion of their Social Security benefits may become subject to federal income tax. Provisional income is generally calculated as the sum of adjusted gross income, tax-exempt interest, and one-half of the Social Security benefits received.

If provisional income falls between $25,000 and $34,000 for single filers, or between $32,000 and $44,000 for those filing jointly, up to 50% of Social Security benefits may be taxable. For provisional income exceeding $34,000 for single filers or $44,000 for joint filers, up to 85% of Social Security benefits can be subject to federal income tax. This means that working more and earning higher income can increase the amount of Social Security benefits that are included in taxable income.

Medicare Premium Considerations

Working in retirement can also impact the cost of Medicare premiums, specifically for Medicare Part B and Part D. Individuals with higher incomes may be subject to the Income-Related Monthly Adjustment Amount (IRMAA), which is an additional charge added to their standard premiums. This adjustment is based on a retiree’s modified adjusted gross income (MAGI) from two years prior to the current Medicare year. For instance, 2025 Medicare premiums are determined by 2023 MAGI.

For 2025, if a single individual’s MAGI exceeds $106,000, or a married couple filing jointly has a MAGI over $212,000, they will pay a higher premium for Medicare Part B and Part D. The increase in premiums is tiered, meaning that as MAGI rises above the initial threshold, the additional amount paid for Medicare premiums also increases through several income brackets.

For example, a single individual with a 2023 MAGI between $106,000 and $133,000 would pay a higher Part B premium in 2025 compared to someone below that threshold. Similarly, a married couple filing jointly with a 2023 MAGI between $212,000 and $266,000 would also face increased premiums. The SSA notifies beneficiaries if they are subject to IRMAA, detailing the new premium amount.