Working while collecting Social Security: The 'slow fade' to retirement more people are choosing
In the year you hit full retirement age, that limit increases threefold; and in the month you hit full retirement age, the annual earnings test ends. From that point on, you can earn without limitations, and while you don’t get the amount you forfeited previously in a lump sum, your monthly benefit is adjusted upward so you will recoup all the benefits that were withheld.
Use this calculator on the SSA website to walk through the calculation.
Read more: How to find out your 2026 Social Security COLA increase
A bridge to an encore career
When Smith left her corporate career, she was trying to figure out what to do with her life. “I focused on my health, joined and chaired the board of a large health system, and then I slowly moved into coaching and consulting for small nonprofit healthcare organizations," she said.
The work was rewarding but also much more satisfying. “I like the money from the combination of Social Security and work earnings and the ability to have an impact in an area I care about, which is healthcare,” she said. “The other thing for me is the interaction—the ability to have that connection with so many people and to help them.”
Liu said Smith’s journey is a common one: using the income to phase into retirement.
Bradley Schurman, demographic strategist and the author of “The Super Age,” calls it a “slow fade.”
“Retirement has become a slow fade, not a finish line, and this data shows just how blurry that boundary has become,” he said. “And that boundary is radically different, depending on your economic position in those retirement years, with lower-income folks taking early retirement and higher-income ones waiting until they are fully vested.”
Need the money vs. want to work
The majority of workers 65 and older say they work both because they need the money and because they want to work, according to a report from the Pew Research Center on how Americans view their jobs. Some 17% say they keep working simply because they need the money.
"This helps them make ends meet," Richard Johnson, AARP's vice president of financial security, told Yahoo Finance. "The fact that many people need both a paycheck and a Social Security check to pay their bills underscores the danger of any efforts to cut Social Security benefits. Many retirees are barely hanging on as it is."
The truth is many Americans are not financially prepared to stop working, and some do get a kick out of what they do. Older adults reported having more positive experiences with work overall and that it boosted their health and sense of well-being, compared with working adults between ages 50 and 64, according to a University of Michigan poll.
As of August of this year, there were approximately 11.9 million workers over 65 in the US labor force, representing roughly 7% of the total workforce, more than four times the number in the mid-1980s.
That group is projected to be 8.6% of the labor force in 2032, according to the Bureau of Labor Statistics. And older adults are projected to account for the lion’s share of labor force growth between now and then.
“We’ve built a system that practically guarantees people will keep working after they claim Social Security,” Schurman said. “It’s not a return to work — it’s the reality of the Super Age: longer lives, higher costs, and a retirement model that hasn’t kept up.”
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including "Retirement Bites: A Gen X Guide to Securing Your Financial Future," "In Control at 50+: How to Succeed in the New World of Work," and "Never Too Old to Get Rich." Follow her on Bluesky and X.
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