Is 67 Too Old to Work? Financial and Retirement Considerations

Many people approaching their late 60s wonder whether to keep working or retire. Some enjoy their jobs and want to stay active, while others feel financial pressure to continue earning. Rising living costs, longer life expectancy, and uncertain retirement savings make this decision more complex than ever.

Deciding whether to work at 67 involves key financial and logistical factors. Income stability, healthcare needs, Social Security timing, and tax implications all play a role. Understanding these considerations helps individuals make an informed choice about continuing employment or transitioning into retirement.

Balancing Wages and Retirement Funds

Working at 67 provides financial stability but requires careful management of income and retirement savings. Earning a paycheck while drawing from retirement accounts affects taxes and long-term financial security.

Required minimum distributions (RMDs) from tax-deferred retirement accounts like traditional IRAs and 401(k)s begin at 73. However, those still working with a 401(k) from their employer can delay RMDs from that account if they don’t own more than 5% of the company, allowing savings to grow tax-deferred.

Additional wages can push retirees into a higher tax bracket, increasing the tax burden on both earnings and retirement withdrawals. For example, a single filer earning $50,000 from wages and withdrawing $30,000 from a traditional IRA in 2024 would have a taxable income of $80,000, placing them in the 22% federal tax bracket. Strategic withdrawal planning—such as using Roth accounts, which are tax-free, or spreading withdrawals over multiple years—can help reduce tax liabilities.

Healthcare Coverage

Medical expenses become a greater concern with age, making healthcare coverage a key factor in deciding whether to keep working. Employer-sponsored health insurance often offers lower premiums, deductibles, and out-of-pocket costs compared to individual plans. Many large employers subsidize premiums, making coverage more affordable.

Medicare eligibility begins at 65, but those with employer-sponsored coverage from a company with at least 20 employees can delay Medicare Part B enrollment without penalties, avoiding the standard Part B premium of $174.70 per month in 2024. Once employment ends, individuals have an eight-month special enrollment period to sign up for Part B without penalties. Missing this window results in lifelong premium surcharges.

Employer plans may also coordinate with Medicare. Some workplace policies become secondary coverage once Medicare is in place, reducing out-of-pocket costs. Retiree health benefits, if available, can supplement Medicare by covering copayments and prescription drugs. Comparing employer coverage with Medicare Advantage or Medigap policies helps determine the best financial option.

Social Security Impact

Working at 67 affects Social Security benefits, particularly in terms of timing and earnings. While individuals can claim benefits as early as 62, waiting until full retirement age (FRA) results in larger monthly payments. For those born in 1960 or later, FRA is 67. Delaying beyond this age increases payments by 8% per year until 70, significantly boosting long-term income.

At FRA, there are no earnings limits or reductions for those who continue working while collecting benefits. However, wages still contribute to Social Security taxes, potentially increasing future benefits if new earnings replace lower-earning years in the 35-year calculation used to determine payments.

Spousal and survivor benefits also play a role. A working spouse who delays claiming can increase both their own benefit and the survivor benefit their partner would receive. This can be especially beneficial for couples where one spouse earned significantly less. Additionally, individuals previously married for at least 10 years may be eligible for benefits based on an ex-spouse’s record, providing additional income without affecting the ex-spouse’s payments.

Tax Considerations

Remaining in the workforce at 67 introduces several tax implications beyond income brackets and retirement withdrawals. Medicare taxes apply to all wages, unlike Social Security taxes, which stop at $168,600 in 2024. Individuals earning more than $200,000 as a single filer or $250,000 as a married couple filing jointly pay an extra 0.9% Medicare surtax.

Investment income also plays a role. The Net Investment Income Tax (NIIT) imposes a 3.8% surtax on investment income—such as dividends, interest, and capital gains—for individuals with a modified adjusted gross income (MAGI) above $200,000 ($250,000 for joint filers). If wages push total income above these thresholds, more investment earnings become subject to this tax. Strategies like tax-loss harvesting or spreading capital gains over multiple years can help reduce the impact.

Employer Options

For those who want to keep working at 67, employer policies and benefits can influence the decision. Some companies offer phased retirement programs, allowing employees to gradually reduce hours while maintaining benefits like health insurance and retirement contributions. Flexible work arrangements, such as remote work or part-time schedules, can help older employees balance income with personal priorities.

Certain employers continue matching 401(k) contributions regardless of age, allowing workers to grow their retirement savings. Some companies also offer longevity bonuses or extended pension accruals for employees who stay beyond traditional retirement age. Evaluating these benefits helps determine whether staying employed is financially beneficial.

Additional Income Streams

For those looking to supplement income without full-time employment, alternative revenue sources can provide financial stability. Rental properties, dividend-paying stocks, and annuities generate passive income. Real estate investments can provide monthly rental income while appreciating in value, though managing properties requires effort, so hiring a property manager may be necessary.

Freelancing, consulting, and part-time work are also options. Many retirees leverage their expertise by offering consulting services in their former industries, often earning competitive hourly rates. The gig economy provides flexible work opportunities, such as tutoring, writing, or ride-sharing. Diversifying income sources can reduce reliance on retirement savings while maintaining financial independence.