How Part-time Work Affects Retirees' Savings, Social Security, and Medicare

More and more Americans are deciding to work part-time jobs even after they retire. The reasons can be different for everyone. Some people might want extra money, others might enjoy the routine, or some just want to keep busy.

By 2026, about 30% of folks aged 65 to 74 are expected to be working, whether full-time or part-time. That’s a big jump from 17.5% back in 1996. And the number of working people over 70 will more than double compared to 30 years before.
 

What This Means for Your Money

If you’re worried your retirement funds might not last, picking up some part-time work could help. Instead of pulling money out of your savings, you can use your earnings for daily expenses. 

This way, your retirement funds continue to grow over time, thanks to compound interest. Financial advisors think it’s a smart move for those who might be on the fence about their retirement savings.
 

Social Security: Know the Rules

If you’ve hit the full retirement age (which the government sets) and are collecting Social Security, you can earn any amount without affecting your benefits. But careful, if your earnings are too high, you might need to pay more taxes on them.

If you haven’t reached that age yet but start collecting Social Security early, there’s a limit to how much you can earn from work without reducing your benefits. 

In 2019, this limit was $17,640. If you earn more, your Social Security payments may be cut. This could be a surprise if the Social Security Administration finds out later and adjusts your benefits all at once.

However, once you do reach full retirement age, you can get higher monthly payments to make up for the earlier reductions. But be warned, it might take many years to get all that money back.
 

Medicare Costs Could Rise

Your part-time job earnings might also lead to higher Medicare costs, particularly if your total income goes over a certain bracket. This rule affects both Medicare Part B (which covers doctor visits and outpatient services) and Part D (prescription drug coverage). 

Higher premiums kick in for individuals earning more than $85,000 or couples making over $170,000. Still, this policy impacts less than 5% of those on Medicare.

The government looks at your income from two years back to decide if you'll pay more for Medicare. So, a boost in earnings today could mean higher Medicare costs down the line.

In summary, while part-time work can offer financial and personal benefits for retirees, it’s essential to understand how it might affect other aspects of your financial life, like Social Security and Medicare.

Check out: How to Successfully Change Careers at 40

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