There are plenty of good reasons to hold down a job in retirement. For one thing, you might want or need the extra income to supplement your savings and Social Security benefits.
Also, retirement can be boring. It's hard to go from having a full-time work schedule to having no place to be day in, day out. So holding down a job might add some much-needed structure to your routine.
Retirees also have a tendency to get lonely. This may not happen if you're surrounded by friends in the same boat. But if you're single, live alone, and don't know many retirees in your area, you might quickly start to miss the company of others. Having a job to report to could help things pick up on the social front.
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Now one thing you should know is that you're absolutely allowed to earn an income from a job while collecting Social Security. But if you know you intend to keep working in retirement, then you may want to hold off on claiming Social Security early for one big reason.
You don't want to risk having benefits withheld
You're entitled to your full monthly Social Security benefit based on your personal earnings history once you reach full retirement age (FRA). That age is 67 if you were born in 1960 or later.
Meanwhile, you're allowed to sign up for Social Security as early as age 62. Filing before FRA will mean having to accept a reduced monthly benefit for life. For some, it's worth taking that hit to get their money sooner.
As mentioned, you can continue to work in retirement even if you're getting Social Security. Or, to put it another way, you can first sign up for Social Security even if you're still at a job as long as you're at least 62 years of age.
But one thing you should know is that if you're working and collecting Social Security at the same time before reaching FRA, you'll need to be mindful of the program's earnings-test limit. That limit dictates how much income you can bring in before you risk having benefits withheld.
In 2024, you'll risk losing $1 in Social Security for every $2 you earn beyond $22,320. That limit rises to $59,520 if you'll be reaching FRA in 2024, and in that case, you'll lose $1 in Social Security per $3 of earnings above that threshold. Once you reach FRA, you can earn any amount of income without risking having benefits withheld.
It's for this reason, though, that you may want to reconsider an early Social Security filing if you know you intend to continue to work. Filing early will mean having your monthly benefit reduced for life. Why do that if you might end up having some of that benefit withheld due to earning too much income?
Run the numbers
You may decide that it makes sense financially for you to claim Social Security early, accept a reduced monthly benefit for life, and limit the number of hours you work so you don't have to worry about exceeding the earnings-test limit. That's your choice, and it may work out just fine. But consider that option carefully before moving forward with your decision.
If you're able to hold down a part-time job in retirement, you may find that between that and your savings, you're able to wait until FRA arrives to claim your benefits. That way, you won't have to worry about exceeding an earnings-test limit (which can change from year to year), and you won't have to worry about living out the rest of your retirement on a reduced Social Security benefit.
