More Retirees Heading Back to Work: 4 Things to Consider Before You Un-Retire

Key Points

If you’ve retired early and are collecting Social Security, working could lower that benefit -- at least temporarily.

You might also lose means-based benefits from Medicaid or the Supplemental Nutrition Assistance Program.

It could also affect subsidies you might be receiving via the Affordable Care Act's Health Insurance Marketplace.

If you're retired and considering wading back into the workforce, it could be for any number of reasons. Maybe you need more income, miss the intellectual stimulation, or simply miss engaging with co-workers. Whatever your reason, you may want to consider four potential bumps in the road.

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1. Are you at full retirement age yet?

Full retirement age (FRA) for anyone born in 1960 or later is 67. If you claimed Social Security benefits before reaching FRA, but now hope to add earned income to your monthly Social Security benefit, you may be in for an unpleasant surprise. That's because you'll be subject to an annual earnings test.

What that means is that the Social Security Administration (SSA) will deduct $1 from your monthly benefit payments for every $2 you earn above the annual limit. In 2026, that limit is $24,480. In the year you reach FRA, the SSA will deduct $1 for every $3 you earn above $65,160. Once you reach FRA, you can earn as much as you'd like without any deductions to your benefits.

The good news is that the money deducted is not lost. Once you hit FRA, the SSA will recalculate your benefits to ensure each dollar deducted is returned to you through monthly payments.

2. Are you receiving means-tested benefits?

If you're receiving benefits with strict income limits -- such as Supplemental Security Income (SSI), the Supplemental Nutrition Assistance Program (SNAP), Medicaid, housing subsidies, or Medicare's "Extra Help" program -- you may not earn as much in income as you lose in benefits.

Each of these programs is intended for those who need financial assistance, so a salary can lower or even cut your benefits. Before heading back to work, make sure to learn the income limits associated with any benefits you receive and decide whether your earned income is enough to offset that loss.

3. Where are you receiving healthcare coverage?

The need for healthcare doesn't stop with retirement. If you've already retired but haven't reached the age of 65, when you can claim Medicare, you may be receiving coverage through the Affordable Care Act's (ACA's) Health Insurance Marketplace. If subsidies are helping you pay for that insurance, any change in income may change the amount of your subsidy and how much you'll have to pay for coverage.

Of course, if you go back to work and your new company offers equivalent healthcare insurance, the issue may take care of itself.

4. Have you done the tax-related math?

Part of planning for retirement is figuring out which tax bracket you'll land in. Your best bet is to meet with a financial advisor or tax professional to help you estimate your combined income if you return to the workplace. That way, you'll have an idea of whether working will change your tax bracket and can begin to prepare for it.

What's the point of being retired if you aren't enjoying yourself? If you think going back to work will improve your life, go for it. However, you'll want to make sure you know what you're getting into financially first.