Yes, you can retire at 65 and still work, and millions of Americans do exactly that. The catch is that a paycheck at 65 collides with four separate systems at once: Social Security’s earnings test, federal tax on your benefits, Medicare enrollment rules, and premium surcharges tied to your income. For most people turning 65 today, full retirement age falls between 66 and 67, so working at 65 puts you in the zone where all of these rules apply.1Social Security Administration. See Your Full Retirement Age (FRA)
Should You Claim Social Security at 65 or Wait?
If your job covers your living expenses, the strongest financial argument is to delay. For every year you postpone benefits beyond your full retirement age, your monthly check grows by 8% until age 70, at which point the increase stops.2Social Security Administration. Benefits Planner: Retirement – Delayed Retirement Credits Someone born in 1960 or later whose full retirement age is 67, and who waits until 70, collects 24% more per month than if they had claimed at 67.
Claiming at 65 means two things: a permanently reduced benefit, because you are before full retirement age, and exposure to the earnings test described next. Health, savings, and family situation can still make early claiming the right call. But the 8%-per-year delayed retirement credit is close to a guaranteed return, and a working salary is what makes waiting possible.
The Earnings Test if You Claim Before Full Retirement Age
If you start Social Security at 65 while still working, the earnings test limits how much you can earn before the government temporarily withholds part of your benefits. For 2026, the annual limit is $24,480. Earn more, and Social Security withholds $1 in benefits for every $2 you go over.3Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
A more generous rule applies during the calendar year you reach full retirement age. In 2026, that threshold is $65,160, with $1 withheld for every $3 above the limit, and only earnings in the months before your birthday month count.3Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet Once you actually hit full retirement age, the earnings test disappears completely. You can earn any amount from that point forward without any effect on your benefits.4Social Security Administration. Benefits Planner: Retirement – Receiving Benefits While Working
Withheld benefits are not lost. When you reach full retirement age, Social Security recalculates your monthly payment upward to account for the months benefits were held back.5Social Security Administration. Retirement Benefits The short-term cash flow hit is still real, though, and people who don’t report rising earnings to Social Security can end up owing the agency an overpayment later.
Taxes on Your Benefits When You’re Also Earning
Wages plus Social Security often means paying federal income tax on a portion of the benefits themselves. The IRS uses a “combined income” formula: your adjusted gross income, plus any tax-exempt interest, plus half of your Social Security benefits.6Internal Revenue Service. Social Security Income A paycheck lifts that total quickly.
For single filers with combined income between $25,000 and $34,000, up to 50% of your benefits become taxable. Above $34,000, up to 85% become taxable. For married couples filing jointly, the corresponding bands are $32,000 to $44,000 (up to 50%) and above $44,000 (up to 85%). Those thresholds haven’t been indexed since the 1980s and 1990s, so a working retiree usually lands in the 85% bracket without much effort. The taxable portion is then taxed at your regular federal income tax rate.6Internal Revenue Service. Social Security Income
You can ask Social Security to withhold federal tax directly from your monthly payment at 7%, 10%, 12%, or 22%.7Social Security Administration. Request to Withhold Taxes Quarterly estimated payments to the IRS work too. Either avoids a large April bill.
Medicare and Your Employer’s Health Plan
Turning 65 opens Medicare eligibility, but whether you should enroll right away depends on the size of your employer.
- If your employer has 20 or more employees, the group plan pays first and Medicare pays second. You can generally delay Part B without penalty while that coverage stays in place.
- If your employer has fewer than 20 employees, Medicare pays first. Enroll in Part A and Part B during your initial enrollment period so you don’t end up with gaps.
When your job or employer coverage ends, you get an eight-month Special Enrollment Period to sign up for Part B without a late penalty.8Medicare.gov. Working Past 65 Missing that window is expensive: the Part B late-enrollment penalty adds 10% to your monthly premium for each full 12-month period you could have been enrolled but weren’t, and it sticks for as long as you have Part B.9Medicare.gov. Avoid Late Enrollment Penalties Before you decide to delay, get written confirmation from your benefits office that your employer plan counts as creditable coverage.
Working Income Can Raise Your Medicare Premiums
A high salary at 65 has a delayed cost most people don’t see coming: higher Medicare premiums two years later, through the Income-Related Monthly Adjustment Amount (IRMAA). IRMAA applies to both Part B and Part D and is calculated from your tax return two years back, so your 2024 income sets your 2026 premiums.10Social Security Administration. HI 01101.010 – Modified Adjusted Gross Income (MAGI)
The 2026 standard Part B premium is $202.90 per month. Once your modified adjusted gross income passes $109,000 (single) or $218,000 (joint), IRMAA surcharges kick in and can more than triple that premium. At the top tier ($500,000 for individuals, $750,000 for joint filers), Part B reaches $689.90 per month. Part D carries its own IRMAA surcharges at the same income tiers, adding up to $91.00 per month on top of your drug plan’s base premium.11Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles
If your income drops sharply after you stop working, you can ask Social Security to use a more recent tax year through a life-changing event appeal, but only specific qualifying events, like retirement or job loss, trigger that option.
The HSA Trap at 65
If you have a high-deductible health plan through work and contribute to a Health Savings Account, enrolling in any part of Medicare cuts your HSA contribution limit to zero. Contributions made after you’re covered by Medicare become excess contributions, subject to a 6% excise tax for each year they stay in the account.12Internal Revenue Service. Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
What catches working 65-year-olds is that Medicare Part A can be backdated up to six months when you enroll, and anyone who claims Social Security at 65 is automatically enrolled in Part A. HSA contributions made during those retroactive months become excess. To keep contributing to an HSA past 65, you need to delay both Social Security and Medicare Part A.
Contributing to Retirement Accounts and Delaying RMDs
Working at 65 keeps the door open for tax-advantaged saving. There’s no age cap on contributions to a 401(k), traditional IRA, or Roth IRA as long as you have earned income, and workers 50 and older can make catch-up contributions on top of the standard limits.13Internal Revenue Service. Retirement Topics – IRA Contribution Limits
Required minimum distributions from most retirement accounts have to begin by April 1 of the year after you turn 73.14Internal Revenue Service. Publication 590-A (2025), Contributions to Individual Retirement Arrangements (IRAs) If you’re still employed at that point and participate in your current employer’s 401(k) or 403(b), you can delay distributions from that specific plan until the year you actually retire, as long as you don’t own 5% or more of the business.15Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs The exception only covers your current employer’s plan. Traditional IRAs and 401(k)s from past jobs still have to distribute on schedule. Some people roll old employer plans into their current 401(k) before 73 to shelter those balances under the still-working rule, though not every plan accepts incoming rollovers.