Some people stop working completely the moment they retire. Others hold down a part-time job, freelance on the side, or even launch a small business, and there can be real advantages to all of those choices.
The extra income is the obvious draw. If you rely heavily on Social Security and your savings are modest, a part-time paycheck can bridge the gap between your monthly benefit and your actual living expenses. Beyond the dollars, there is genuine social and emotional value in staying active. Keeping a regular schedule, engaging with coworkers or customers, and having a reason to leave the house a few days a week can do a great deal for your wellbeing in retirement.
In this Reddit post, a 74-year-old who is still working raises a pointed question about Social Security. They began collecting benefits at age 67 and want to know whether their current earnings could push their monthly checks higher.
It is a smart question. Wages earned later in life can move the needle on Social Security benefits, but whether they actually do depends entirely on the shape of your lifetime earnings record.
How Social Security benefits are calculated
Your Social Security benefit rests on the income you earned during your 35 highest-paid years of work. The Social Security Administration (SSA) adjusts those earlier wages upward for historical wage growth before arriving at the monthly figure you can collect at full retirement age (FRA), which is 67 for anyone born in 1960 or later.
Claiming at 62 is allowed, but doing so permanently reduces your monthly benefit, with a deduction applied for each month you claim before FRA. Waiting past FRA has the opposite effect: each additional month adds roughly 2/3 of 1%, or about 8% per year, up through age 70. After 70, no additional delayed-retirement credits accumulate, so there is no financial reason to postpone past that birthday.
How working later in life can affect your benefits
Whether post-retirement wages change a benefit comes down to where those earnings land within a lifetime record. The SSA builds its calculation on the top 35 earning years, so current wages only matter if they are high enough to displace one of the years already in that group.
Consider a concrete example. Suppose the lowest-earning year in the poster’s current top-35 set reflects $30,000 in wages. If they are now earning $15,000 a year from part-time work, that figure falls short of the existing floor and changes nothing. But if they are now earning $35,000, that higher number knocks out the weaker year, nudging the lifetime average upward and potentially raising the monthly benefit once the SSA processes the updated data.
The SSA reviews the earnings records of all working beneficiaries each year. Employers submit W-2s, and self-employed individuals report income through their tax returns. When those figures arrive, the SSA factors them into the 35-year average. Any year that makes the top 35 raises the monthly average and, in turn, the benefit payment. Per the official SSA publication “How Work Affects Your Benefits,” this is an automatic process. Any resulting increase is paid in December of the following year, retroactive to January of that year, with a notice mailed to the beneficiary confirming the adjustment. For example, 2025 earnings that qualify would generate a higher payment starting in December 2026, backdated to January 2026.
The tax side of working in retirement
Because the Reddit poster has already passed FRA, their earned income does not trigger the earnings test, the withholding rule that only applies to people who claim benefits before reaching FRA. For 2026, that pre-FRA earnings limit sits at $24,480. Past FRA, a beneficiary can earn any amount without an automatic benefit reduction.
Taxation is a separate concern. Federal taxes can apply to up to 85% of Social Security benefits depending on a filer’s combined income, which the SSA defines as adjusted gross income plus tax-exempt interest plus one-half of annual Social Security benefits. For individual filers, up to 50% of benefits are taxable when combined income falls between $25,000 and $34,000, with that share climbing to 85% above $34,000. For married couples filing jointly, those tiers begin at $32,000 and $44,000. These thresholds have not been adjusted for inflation since the 1983 Social Security amendments first introduced the benefit tax, so more retirees are pulled into the taxable range every year simply because their benefits grow with the annual cost-of-living adjustment.
On that front, Social Security beneficiaries received a 2.8% cost-of-living adjustment for 2026, based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers from the third quarter of 2024 through the third quarter of 2025. That was slightly higher than the 2.5% COLA that took effect at the start of 2025. On average, retirement benefits rose by about $56 per month beginning in January 2026, lifting the typical retired worker’s check from $2,015 to roughly $2,071. Any benefit bump from the annual earnings recalculation would stack on top of that COLA, compounding the improvement over time. It is also worth noting that the SSA raised the maximum amount of earnings subject to Social Security tax in 2026 to $184,500, up from $176,100 in 2025, meaning higher earners contribute more to the program throughout the year.
What recent legislation actually changed
During the 2024 campaign, President Trump pledged to eliminate all federal income tax on Social Security benefits. That promise produced a partial result. While the pledge was widely understood as a commitment to remove Social Security from the tax code outright, the One Big Beautiful Bill Act, signed into law on July 4, 2025, created a new senior deduction rather than doing so. Trump described the provision as “the largest tax break in American history for our nation’s seniors,” though that characterization has drawn scrutiny from tax analysts.
The deduction is $6,000 per qualifying individual age 65 and older, available for tax years 2025 through 2028. Married couples where both spouses qualify can claim $12,000 in total. The full deduction is available for individual filers with up to $75,000 in modified adjusted gross income and for joint filers with up to $150,000. It phases out above those thresholds at a 6% rate and disappears entirely for individuals with income of $175,000 and married couples with income of $250,000. The deduction is available whether filers take the standard deduction or itemize, and it stacks on top of the existing additional standard deduction already available to taxpayers age 65 and older. Crucially, the law leaves the underlying rule intact: up to 85% of Social Security benefits can still be subject to federal tax depending on a beneficiary’s combined income. The senior deduction is designed to help offset that liability, not eliminate it.
Analysts at the nonpartisan Committee for a Responsible Federal Budget have projected that the senior deduction and related tax changes will reduce revenue flowing into the Social Security trust funds by roughly $30 billion per year, potentially accelerating the projected insolvency of the Old-Age and Survivors Insurance trust fund to late 2032, about six months earlier than previously estimated. That long-term tradeoff is worth keeping in mind as retirees weigh the near-term tax savings from the new deduction.
Why continuing to work can still pay off
For retirees who did not accumulate a full 35-year earnings record, part-time work in retirement can be a direct path to a higher benefit for life. Replacing a year of zero earnings with even a modest wage moves the 35-year average upward, and because Social Security pays out for the rest of your life, a small monthly increase can add up considerably over a long retirement. The tax implications deserve careful attention, but so does the potential upside built into the benefit calculation itself.
Editor’s note: This article was updated to add the SSA’s 2026 average retirement benefit figure of $2,071 (up from $2,015), the 2026 Social Security taxable wage maximum of $184,500, and the Committee for a Responsible Federal Budget’s projection that the One Big Beautiful Bill’s tax provisions could accelerate Social Security trust fund insolvency to late 2032.
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