Some people stop working the moment they retire, but many choose to keep a foot in the workforce. A part-time job or small business can offer real advantages, both financial and personal.
The extra income can matter greatly, especially for retirees who rely heavily on Social Security and have limited savings. Even a modest paycheck helps cover everyday expenses more comfortably. Beyond the money, part-time work gives structure to the week, reduces isolation, and creates opportunities to stay engaged and connected.
In a recent Reddit post, a 74-year-old who continues to work asked how their job might affect their Social Security benefits. They began collecting at age 67 and want to know whether current earnings could raise the amount they receive each month.
It is a fair question. Income earned later in life can influence Social Security benefits, but whether it actually does depends entirely on your lifetime earnings record.
How Social Security benefits are calculated
Your Social Security benefit is based on the income you earned during your 35 highest-paid years. Earlier wages are adjusted to account for historical wage growth, producing a figure that reflects your career earnings in today’s terms. That adjusted average feeds directly into the benefit you are entitled to at full retirement age, which is 67 for anyone born in 1960 or later.
You can start claiming Social Security as early as 62, but doing so carries a permanent cost. For those born in 1960 or later, claiming at 62 reduces the monthly benefit by as much as 30% compared to waiting until full retirement age.
Delaying past full retirement age works in the opposite direction. Benefits grow by roughly 8% for each full year you wait, up to age 70, at which point the increases stop. Waiting from 67 to 70 produces a benefit that is 24% higher than the full-retirement-age amount.
How working later in life can affect your benefits
The wages the poster is earning at 74 might raise their monthly Social Security checks, but it is equally possible those current earnings will change nothing at all. The outcome hinges entirely on where those earnings land relative to the 35 years already on their record.
Social Security calculates benefits using the 35 highest-earning years. Suppose the lowest year in the poster’s top 35 was $30,000. If they are now earning only $15,000 a year from part-time work, that income would not displace any of their top earning years, and their benefit would stay exactly where it is.
At $35,000 a year, however, the picture changes. That figure exceeds the weakest year in their top 35, so the Social Security Administration would eventually update the record, swap out the lower year, and recalculate the benefit upward. This process is called the Automatic Earnings Recomputation, or AERO. The SSA runs it automatically each year after employers file W-2s, so the poster does not need to call or file any paperwork to trigger a review.
When a higher-earnings year qualifies, any resulting benefit increase is paid retroactively to January of the year following the earnings year. In practice, beneficiaries typically see the adjustment reflected in payments around December of that following year.
One key point for the poster: at age 74, well past full retirement age, there is no earnings limit that could reduce their current benefits. The annual earnings cap applies only to workers who claim Social Security before reaching full retirement age. In 2026, that limit is $24,480 for those under full retirement age for the entire year, with the SSA withholding $1 for every $2 earned above that threshold. Once past full retirement age, a beneficiary can earn any amount without any reduction to their monthly check.
This is also why it can make sense for retirees who do not yet have a full 35-year work history to take on some part-time work. Even modest wages can replace a zero-income year in the formula and potentially raise future Social Security checks.
A legislative proposal worth watching
The earnings test that limits benefits for early claimers has drawn renewed scrutiny on Capitol Hill. Senator Rick Scott introduced the Senior Citizens’ Freedom to Work Act at a late March 2026 Senate Aging Committee hearing. Representative Greg Murphy introduced the companion legislation in the House in April 2026, and Senator Tommy Tuberville signed on as a cosponsor. The bill would repeal the retirement earnings test altogether, removing the threshold that currently withholds benefits from claimers who have not yet reached full retirement age but continue working. Supporters argue the provision discourages older Americans who want to remain in the workforce. The bill has been referred to committee in both chambers, and its prospects remain uncertain.
Other recent changes worth knowing
Beyond the AERO process, two other developments matter for current beneficiaries. Social Security benefits received a 2.8% cost-of-living adjustment beginning in January 2026, lifting the average retired worker’s monthly benefit by roughly $56 to approximately $2,071. That adjustment was slightly higher than the 2.5% COLA that took effect in 2025.
The Social Security Fairness Act, signed into law on January 5, 2025, eliminated the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). Those rules had reduced or eliminated benefits for more than 2.8 million people, including many teachers, firefighters, and other public employees who also receive a pension from work not covered by Social Security taxes. By July 7, 2025, the SSA had completed distributing more than $17 billion in retroactive payments to eligible beneficiaries, finishing the rollout five months ahead of schedule. If you were affected by either provision, you should already be seeing a higher monthly payment. Note that some spousal and survivor claims are still working through the process, particularly for individuals who never filed because they assumed GPO would reduce their benefit to zero.
Editor’s note: This pass corrects the number of people originally harmed by WEP and GPO from “more than 3.1 million” to “more than 2.8 million,” which matches the SSA’s official figure for those whose benefits were reduced or eliminated by those provisions. It also adds Senator Tommy Tuberville as a cosponsor of the Senior Citizens’ Freedom to Work Act and refines the legislative timeline to reflect that Sen. Scott introduced the Senate bill at a late March 2026 committee hearing and Rep. Murphy introduced the House companion in April 2026.
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