Why Working Part-Time in Retirement Can Be Beneficial
Extra Income and the Reality of Social Security
A lot of people assume that once they retire, there’s no sense in working. However, holding a part-time job during retirement can be very rewarding. One significant advantage is the extra income. The average Social Security recipient currently receives $1,920.48 each month. Even with savings to supplement this amount, it may not cover monthly expenses comfortably, especially when you want to enjoy various activities. Taking on a part-time job can help make up this financial shortfall, providing some financial cushion for unexpected costs.
Image source: Getty Images.
Mental and Physical Health Benefits
A part-time job can also benefit your mental health. Many retirees experience loneliness due to a lack of social interactions once they leave the workforce. Working can help you stay connected with others. Furthermore, maintaining a job often encourages physical activity, which can help prevent various health problems.
The Social Security Administration allows seniors to work while receiving benefits. However, you must be aware of the earnings-test limit. This limit determines how much you can earn from a job before your Social Security benefits are reduced.
Understanding the Earnings-Test Limit
The earnings-test limit indicates the income threshold that leads to a portion of your monthly benefits being withheld. If you surpass this limit, you may initially receive smaller Social Security payments. Fortunately, these withheld benefits will be restored once you reach full retirement age.
Those who have reached full retirement age are exempt from the earnings-test limit. If you fall into this category, you could potentially earn up to $200,000 annually without any impact on your Social Security benefits.
New Earnings-Test Limits for 2025
In 2025, the earnings-test limits will increase. Currently, you can earn up to $22,320 without having your benefits withheld, but this threshold will rise to $23,400. Beyond this amount, $1 in benefits will be withheld for every $2 earned.
For those who will reach full retirement age in 2025 but start the year before reaching this milestone, the limit is set at $62,160, an increase from $59,520 in 2024. At this level, $1 in benefits will be withheld for every $3 earned.
Don’t Let Fear of Losing Social Security Stop You
If you’re considering a part-time job during retirement, don’t hesitate due to worries about losing your Social Security checks. With the rising earnings-test limits in 2025, you can earn a reasonable amount without immediate penalties. Knowing these numbers allows you to plan your work hours and pay to avoid any issues.
Unlocking Hidden Social Security Benefits
Many retirees may not realize that they are behind on their retirement savings. Fortunately, there are lesser-known “Social Security secrets” that can help boost your retirement income. One simple strategy could add as much as $22,924 to your annual benefits. Learning how to maximize your Social Security benefits can provide the peace of mind sought by many retirees. Click here to learn more about these strategies.
View the “Social Security secrets” »
The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
