How Can Working in Retirement Impact Medicare & Social Security Benefits?
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Many people equate Medicare and Social Security benefits with retirement – but what if, when that day arrives, you aren’t quite ready to say goodbye to your day job?

Maybe you haven’t yet saved enough for retirement or would like a little more financial wiggle room than Social Security provides. Perhaps you own a business you’d rather not exit – or you simply enjoy the social aspect of going to work every day.

The truth is, there are countless reasons why Americans might choose to keep working past the age of 62 (when they become eligible for Social Security) or even 65 (when they become eligible for Medicare). Here, we explore what happens when you choose to continue working and how it may impact your associated benefits.

Working While Receiving Social Security Benefits

For Americans approaching retirement age, the current “full” retirement age is between 66 and 67 depending on when you were born, although you’re eligible to begin collecting benefits at 62.

If you find yourself in between these two thresholds, you can keep working while collecting Social Security, although there’s a limit to how much you can earn before your benefits are reduced. This is known as the Social Security earnings limit, and there are two cut-offs that bear consideration.

For 2023, workers who earn more than $21,240 prior to full retirement age will have their Social Security benefits reduced by $1 for every $2 they earn in excess of that amount. Workers who will reach retirement age in 2023 and earn more than $56,520 will have their benefits reduced by $1 for every $3 they earn in excess of that amount, but only until the month they turn full retirement age. In some cases, if you earn enough, you may have all your Social Security benefits withheld while you’re working.1

Fortunately, those withheld benefits are ultimately returned to you when you hit full retirement age. Once you’re in full retirement, you’re able to earn as much income as you’d like without your Social Security benefits being impacted.

Working While Receiving Medicare Benefits

Medicare Part A coverage is generally available premium-free to people 65 or older, provided they worked and paid Medicare taxes for long enough – typically for a period of at least 10 years.2

If you (or your spouse) are still working at 65, this may impact your Medicare premiums depending on your situation:3

You work at a company with more than 20 employees

  • If you have health insurance with your job, you can wait to sign up for Part B of Medicare Medical Insurance) until you or your spouse stop working. If you choose this route, you won’t be charged a late enrollment penalty.
  • If your employer’s health insurance doesn’t require you to pay a premium for hospital insurance, you can sign up for Part A of Medicare Hospital Insurance) when you turn 65. With this arrangement, your employer’s insurance plan will be required to pay first, and Medicare would pay second.

You work at a company with fewer than 20 employees

  • In this situation, it would be wise to talk to your employer (assuming they provide health insurance) to find out if you need to sign up for Part A and Part B of Medicare when you turn 65. Failure to do so could result in a lack of coverage, as your job-based insurance might not cover the costs of services you require.
  • If you do get Medicare and keep your job-based insurance, Medicare would pay for services first, with your job-based insurance paying second.

Self-employed

  • For self-employed individuals, it’s important to talk to your insurance provider about whether your coverage is considered employer-group health plan coverage (per the IRS . If not, you should consider signing up for Medicare when you turn 65 to avoid a monthly Part B late enrollment penalty.
  • If you have retiree coverage from a previous job, you should talk to your benefits administrator about how it works. In some cases, you must have both Part A and B to be eligible.

It should be noted that if you earn a higher income while receiving Medicare, you may have to pay an additional premium for Medicare Part B and Medicare prescription drug coverage. This amount will be based on your most recent federal tax return.4

Other Considerations

While working in your 60s can impact your Social Security and Medicare benefits, there are other factors that can contribute to the amount you receive as well.

One of the most significant factors is your work history. Specifically, your monthly benefits will be based on your top 35 inflation-adjusted earning years.5 Additionally, your monthly benefits can increase the longer you wait to collect – until you hit the age of 70, when they stop increasing. Lastly, if the higher-earning spouse delays taking benefits until age 70, that higher benefit will be paid for the remainder of the individual’s life or, in the event of their premature passing, their spouse’s life.

Navigating Medicare and Social Security can be challenging. If you need support anticipating your retirement needs or determining the best strategy for claiming benefits, make sure to talk to your financial professional for guidance.

This material is intended for informational/educational purposes only and should not be construed as tax, legal or investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Investments are subject to risk, including the loss of principal. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Certain sections of this material may contain forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is no guarantee of future results. Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption of any kind. Please consult with your financial professional and/or a legal or tax professional regarding your specific situation and before making any investing decisions.

Not associated with or endorsed by the Social Security Administration or any other government agency.

This material is intended for informational/educational purposes only and should not be construed as tax, legal or investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Investments are subject to risk, including the loss of principal. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Certain sections of this material may contain forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is no guarantee of future results. Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption of any kind. Please consult with your financial professional and/or a legal or tax professional regarding your specific situation and before making any investing decisions.

Not associated with or endorsed by the Social Security Administration or any other government agency.

Endnotes

“Social Security Cost-of-Living Adjustment COLA Information.” Social Security Administration.
https://www.ssa.gov/cola/.

“What Does Medicare Cost?” Medicare.
https://www.medicare.gov/basics/get-started-with-medicare/medicare-basics/what-does-medicare-cost.

“Working Past 65.” Medicare.
https://www.medicare.gov/basics/get-started-with-medicare/medicare-basics/working-past-65.

“Medicare Premiums: Rules for Higher-Income Beneficiaries.” Social Security Administration.
https://www.ssa.gov/benefits/medicare/medicare-premiums.html.

“Social Security: Learn About Retirement Benefits.” Social Security Administration.
https://www.ssa.gov/benefits/retirement/learn.html.

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