By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panel agrees that working in retirement can be beneficial due to increased earnings and delayed retirement credits, but it also presents significant risks, including high marginal tax rates and the earnings test. The net effect is highly individual and depends on various factors such as income, health, and personal circumstances.
Risk: High marginal tax rates, including the 'hidden' tax of IRMAA, and the earnings test's retroactive clawback.
Opportunity: Increased earnings that raise the primary insurance amount (PIA) and the option to delay claiming benefits to boost lifelong benefits.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Early claimers who are still working could lose some of their checks to the earnings test.
Earnings from a job may increase your likelihood of owing Social Security benefit taxes.
Working in retirement is one of the smartest moves you can make if you weren't able to save as much as you'd intended when you were younger. It reduces your reliance on your personal savings and allows your investments to grow for longer. It can also give you a sense of purpose and, depending on the work, an opportunity to socialize with others.
But a retirement job also has drawbacks. You'll have less time for hobbies, and it could cost you Social Security benefits in a couple of ways.
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The Social Security earnings test withholds benefits from seniors who are claiming Social Security under their full retirement age (FRA) -- 67 for most people today -- while earning a significant amount from their jobs. How much you lose depends on your age and income.
In 2026, the Social Security Administration will withhold $1 from your checks for every $2 you earn over $24,480 if you'll be under your FRA all year. You lose $1 for every $3 you earn over $65,160 if you'll reach your FRA this year and earn this amount before your birth month.
Some high earners may find that the earnings test wipes out their monthly checks completely, but this is only temporary. The Social Security Administration increases your checks at your FRA if you've previously lost money to the earnings test.
Until then, you may have to settle for smaller Social Security benefits unless you can keep your income from your job below the relevant threshold. Remember, the Social Security Administration typically increases the earnings test limits each year to account for inflation, so you may be able to earn more from your job in 2027 and beyond before you lose any of your benefits.
The federal government taxes the Social Security benefits of all seniors whose provisional incomes -- adjusted gross income (AGI), plus any nontaxable interest from municipal bonds and half their annual Social Security benefit -- exceed the following limits based on their marital status:
| Marital Status | 0% of Benefits Taxable If Provisional Income Is Under: | Up to 50% of Benefits Taxable If Provisional Income Is Between: | Up to 85% of Benefits Taxable If Provisional Income Exceeds: | |---|---|---|---| | Single | $25,000 | $25,000 and $34,000 | $34,000 | | Married | $32,000 | $32,000 and $44,000 | $44,000 |
Working a retirement job will raise your AGI and may put you at risk of owing benefit taxes. This could add thousands of dollars to your tax bill each year. While some people can reduce their expenses or rely more on Roth savings, which don't affect provisional income, others just have to brace themselves for taxes.
You can either set aside money for these taxes on your own or request that the Social Security Administration withhold money from your checks up front. An accountant may be able to help you figure out your best move.
Neither of the things listed above should deter you from taking a retirement job if you need it to make ends meet. Just prepare yourself for how your job might affect your Social Security benefits so you aren't caught off guard when your checks or your tax bill arrive.
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Four leading AI models discuss this article
"The Social Security earnings test functions as a forced annuity purchase rather than a net loss of lifetime benefits, making the 'penalty' narrative misleading."
The article frames working in retirement as a tax and benefit-withholding trap, but it misses the macro-economic reality: the 'earnings test' is essentially a forced deferral mechanism, not a permanent loss of wealth. By triggering the earnings test, retirees are effectively forcing themselves to 'buy' a higher future benefit, as the Social Security Administration recalculates the monthly payout upward upon reaching Full Retirement Age. The real risk isn't the tax or the withholding—it's the opportunity cost of failing to optimize for the 8% annual delayed retirement credit available until age 70. For those with high human capital, the tax bite is a secondary concern compared to the compounding power of delaying claims.
The article correctly highlights that for lower-income retirees, the immediate loss of liquidity from benefit withholding can cause severe cash-flow crises that no future 'recalculation' can solve.
"Working in retirement's SS 'costs' are largely temporary and recoverable, while upsides like higher PIA and savings growth make it a net win for most."
The article accurately outlines the SS earnings test (2026 limits: $24,480 pre-FRA, $65,160 FRA year) and provisional income taxes pushing up to 85% of benefits taxable for singles over $34k or couples over $44k. But it underplays mitigations: earnings test withholdings are repaid dollar-for-dollar via higher FRA benefits; work replaces low-earning years in your AIME (average indexed monthly earnings), permanently lifting PIA. Taxes are front-loadable via withholding or Roth strategies. Net positive for under-savers—extends portfolio life, hedges longevity—unless cashflow-constrained near FRA.
For low-asset retirees living check-to-check, even temporary withholdings could trigger credit card debt or delayed bills, while unexpected taxes erode thin margins without advisor access.
"The earnings test is temporary and self-correcting, but provisional income taxation on working retirees is permanent and can materially increase tax liability—yet the article fails to quantify prevalence or net economic impact."
This article conflates two distinct policy mechanisms—the earnings test and provisional income taxation—as if they're equally material risks. The earnings test is actually a *temporary* benefit reduction that self-corrects at full retirement age (FRA); the SSA recalculates benefits upward retroactively. The real teeth is provisional income taxation, which is permanent and can push 85% of benefits into taxable income. However, the article undersells the math: someone earning $50k at age 64 with $20k Social Security faces maybe $3-5k in additional tax, not 'thousands' annually. The bigger miss: the article never quantifies how many retirees actually hit these thresholds or whether part-time work pencils out net-positive anyway after tax.
If you're working in retirement, you likely don't need Social Security yet—you could delay claiming until 70, when benefits are 24% higher and these thresholds become irrelevant. The article frames working retirees as financially desperate, but many are choosing work for purpose; for them, these tax mechanics are a minor accounting detail, not a 'drawback.'
"Continuing to work in retirement is often a net positive for lifetime retirement cash flow when you account for a larger earnings record and the option to delay claiming."
Overall take: The piece raises legitimate gotchas: the earnings test and provisional income taxes can trim or delay benefits if you work while collecting. But the article’s framing undervalues the upside of staying employed in retirement: more years of earnings raise your PIA, potential catch-up contributions to retirement accounts, and the option to delay claiming to FRA or beyond (which boosts lifelong benefits). It also omits Medicare premium dynamics (IRMAA) and state taxes effects, which can matter but are not uniform. The thresholds are year-specific and can mislead readers if they assume static rules. The net effect is highly individual.
The article overstates the net upside of working in retirement; for someone near or just above FRA, the combination of temporary benefit reductions and higher tax exposure can erode cash flow more than the piece implies.
"IRMAA surcharges create a hidden marginal tax trap that makes part-time work in retirement significantly less profitable than panelists suggest."
Claude is right about the tax math, but both Claude and Gemini ignore the 'hidden' tax: IRMAA (Income Related Monthly Adjustment Amount). Once you cross MAGI thresholds, Medicare Part B and D premiums spike, effectively acting as an additional marginal tax rate on earned income. For a retiree earning just enough to trigger the earnings test, this bracket creep can push their effective marginal tax rate past 40%, rendering the 'work for purpose' argument financially irrational for many.
"Earnings test + taxes + lagged IRMAA yield 50%+ effective marginal rates, undermining work incentives for early retirees."
Gemini nails IRMAA's bite, but the panel overlooks the earnings test's interaction with it: thresholds misalign ($24k pre-FRA vs. IRMAA's $103k MAGI single), creating double cliffs. A 64yo earning $30k + $20k SS faces 50% benefit cut ($1/$2 rule), 85% tax exposure (~22% bracket), and +$200+/mo Part B premium hike in year 3—total marginal rate ~52%. Part-time work rarely nets positive after this stack.
"The earnings test and IRMAA cliffs create a timing arbitrage opportunity the panel hasn't explored—income clustering might outperform steady part-time work."
Grok's 52% marginal rate math is compelling, but it assumes the retiree stays in that earnings band. The real trap is *dynamic*: someone earning $30k might cut hours to $20k, triggering *lower* IRMAA in year 3—but the earnings test clawback still applies retroactively. The article never addresses whether strategic income timing (bunching work into one year, then stopping) could game these cliffs. That's the actual optimization play, not whether work 'pencils out' at static income.
"A one-year income spike can trigger IRMAA and earnings-test effects that last for years, making near-FRA plans highly sensitive to small changes; readers need scenario planning and liquidity buffers, not static 'price of work' math."
Gemini correctly flags IRMAA as a costly marginal tax, but the real swing factor is the dynamic interaction: a one-year income spike can trigger IRMAA, then persist for several years, while the earnings test and its retroactive clawback can reappear if work hours shift. This makes near-FRA planning highly sensitive to tiny changes in hours, taxes, and health; a static, 'price of work' calc misleads readers—build scenario plans and liquidity buffers.
The panel agrees that working in retirement can be beneficial due to increased earnings and delayed retirement credits, but it also presents significant risks, including high marginal tax rates and the earnings test. The net effect is highly individual and depends on various factors such as income, health, and personal circumstances.
Increased earnings that raise the primary insurance amount (PIA) and the option to delay claiming benefits to boost lifelong benefits.
High marginal tax rates, including the 'hidden' tax of IRMAA, and the earnings test's retroactive clawback.