Dennis Schwartz called me last September, eight months into a retirement he’d planned for six years. He was sixty-four, healthy, and bored in a way he hadn’t expected. He’d spent thirty-one years in supply chain management at a manufacturer in Green Bay, done everything right, and arrived at retirement with $680,000 in a 401(k), a pension paying $1,840 a month, and Social Security he’d started collecting at sixty-three.

He’d built a deck. Painted two rooms. Started watching television in the afternoons, which bothered him considerably. A hardware store two miles from his house had posted for a part-time assistant manager. Thirty hours a week, roughly $34,000 a year. He’d worked in a hardware store as a teenager. He liked the work, liked the people, and called me to say he was taking the job.

I told him that was good news. Then I asked two questions: was he currently collecting Social Security? Yes. Had household income ever crossed $130,000 in his working years? A few years, yes, toward the end.

He said: “Is there a ‘but’ coming?”

There was.

Every article on part-time work in retirement tells you roughly the same thing. It runs through the options: consulting in your former field, tutoring, retail, driving, dog-walking, tax preparation, seasonal park work. It tells you these jobs are fulfilling and flexible and a fine way to stay connected. That’s all true, and I’m not here to argue with it.

What those articles almost never tell you is what that paycheck actually does to your finances once it intersects with Social Security, Medicare, and the tax rules governing retirement income. The earnings test that claws back your benefits. The IRMAA cliff that can quietly add thousands to your Medicare premiums. The provisional income calculation that decides how much of your Social Security the IRS gets to tax, using thresholds that haven’t changed since 1983.

That’s what I want to cover here. Not whether to go back to work. For most people, the decision is worth making. But it should be made with an accurate picture of what that income actually nets.

Start with Social Security, because it surprises the most people.

If you’re collecting Social Security before your full retirement age, which for anyone born in 1960 or later is sixty-seven, the Social Security Administration enforces an earnings test. In 2026, the annual earnings limit for those under full retirement age is $24,480. Earn above that and SSA reduces your benefit by one dollar for every two dollars you earn over the limit.

Dennis was going to earn $34,000 at the hardware store. That puts him $9,520 over the threshold. SSA would withhold roughly $4,760 from his annual benefits.

The withheld money isn’t simply gone. SSA credits you for the withheld months and recalculates your benefit upward when you reach full retirement age. Over a long enough life, you roughly break even on the math. But you feel it in your cash flow now, and most people don’t see it coming until the withholding appears in a statement.

If you’re already collecting and thinking about part-time work, run the numbers against the current earnings limit before you accept anything. The claiming decision and the break-even math are worth understanding clearly before you layer part-time income on top of an early claiming strategy. If the cash flow disruption matters to your budget, it’s worth knowing in advance rather than discovering in February.

One more thing: once you reach full retirement age, the earnings test goes away entirely. No limit. No clawback. If you’re sixty-seven or older and collecting, earn whatever you want. The trap only applies before that.

The Medicare piece is trickier, and it tends to hit the people who assumed they’d escaped it.

Medicare Part B premiums are not flat. They increase with income through a program called IRMAA, which stands for Income-Related Monthly Adjustment Amount. The thresholds are based on your modified adjusted gross income from two years prior, meaning your 2024 income determines your 2026 Medicare premiums.

In 2026, the standard Part B premium is $202.90 per month. A single filer whose modified AGI exceeds $109,000 pays the first IRMAA surcharge instead. That brings the monthly premium to $284.10. A married couple filing jointly crosses the first threshold at $218,000. The brackets continue upward from there, reaching $689.90 per month at the top tier.

The way IRMAA works is not gradual. It’s a series of steps. Cross a threshold by one dollar and you pay the full surcharge for the entire year. This creates what financial planners call the cliff problem. If your retirement income is $105,000 as a single filer and part-time work adds $8,000, you’ve crossed the $109,000 line. You now owe the surcharge on both your own premium and, if applicable, your spouse’s. At $81.20 more per month per person, that’s $1,948 in additional annual Medicare premiums.

The $8,000 job just cost you $1,948 before you account for income tax.

Dennis was fine on this front. His retirement income sat comfortably below the threshold, and the hardware store income didn’t change that. But I’ve sat across from people for whom it would have mattered enormously, and they found out in the following year’s premium notice with no ability to undo anything. If you want the full picture on Medicare cost structure, the enrollment decisions and the underwriting traps are worth understanding separately from the income question.

Flexible income is your protection against the IRMAA cliff. Consulting work, where you control how many engagements you take in a calendar year, gives you the ability to stay below a threshold if you’re close. An hourly part-time job at fixed weekly hours does not. That’s a real difference, and it’s worth factoring into which type of work you take on.

The third trap is the one that generates the most genuine surprise in my office: the taxation of Social Security benefits.

Your Social Security income isn’t automatically taxable. Whether it is, and how much, depends on something called provisional income, which is your adjusted gross income plus any tax-exempt interest plus fifty percent of your total Social Security benefit. Once that number exceeds $25,000 for a single filer, up to fifty percent of your Social Security becomes taxable. Once it exceeds $34,000, up to eighty-five percent is taxable. For married couples filing jointly, the thresholds are $32,000 and $44,000.

Those numbers have not changed since Congress set them in 1983 and 1993. They weren’t indexed to inflation. A much larger share of retirees now cross those thresholds than the original legislation contemplated. That’s the world you’re operating in.

Here’s what part-time income does to that calculation. Say you’re a married couple. Your pension, IRA distributions, and Social Security add up to a provisional income of roughly $39,000. You’re in the fifty-percent SS taxation zone. One of you takes a part-time bookkeeping job earning $18,000. That earned income adds directly to your provisional income.

New provisional income: $57,000. That’s well above the $44,000 threshold where eighty-five percent of your Social Security benefit becomes taxable.

If your combined Social Security is $28,000, you just moved from roughly $14,000 in taxable SS to roughly $23,800. That additional $9,800 in taxable Social Security income, at a twenty-two percent marginal rate, adds about $2,156 to your federal tax bill. The $18,000 bookkeeping job is netting you less than it looked like from the outside.

I’m not saying don’t take the job. I’m saying know what it actually nets before you factor it into your household budget.

One other point worth naming, if you’re past seventy-three: required minimum distributions from your IRA don’t disappear because you’re working. You still have to take them. The still-working exception that lets some people delay RMDs exists only for your current employer’s 401(k) plan, and only if the plan allows it. Your traditional IRA? The distributions are required regardless of employment status. Part-time income layered on top of RMDs can push you into exactly the provisional income and IRMAA territory described above, which makes the income picture more complicated for people in their mid-seventies than it is for someone who’s sixty-four.

With all of that in the background, the part-time jobs that hold up well from a financial standpoint share a common feature: the income is controllable.

Consulting in your former field is the strongest option on this front. You decide how many engagements you take. You can work intensively for three months and back off for the rest of the year. Attorneys, accountants, engineers, healthcare administrators, supply chain professionals, IT consultants. The knowledge you spent a career building has real market value, and the hourly rates for experienced consultants are high enough that you can stay under earnings thresholds without working very many hours.

Teaching works well for similar reasons. An adjunct course at a community college or university pays a defined, predictable amount per semester. You know exactly what you’re earning before the semester starts, which makes financial planning straightforward. It also provides structure (a schedule, deadlines, people who expect you) that some people need more than they need the money.

Seasonal work is bounded by definition. Tax preparation, national park and resort positions that run from Memorial Day through Labor Day, retail that intensifies November through January. The income arrives in a defined window, which makes it easier to forecast against your earnings limits and IRMAA thresholds for the year.

Part-time retail at a business you care about (a garden center, a hardware store, a bookshop, an outdoor gear retailer) pays less per hour than consulting, but provides what a lot of clients tell me matters as much as the check: routine, contact with people, a reason to get up and go somewhere. That’s not a small thing, and I don’t want to dismiss it by running it only through a tax calculator.

The clients who go back to work and are glad they did generally knew what they were signing up for. They’d thought about whether they needed the money or the structure, and they were honest about the answer. The difficulty of actually spending what you saved is one of the more common problems I see in the first few years of retirement. Some people return to work because they genuinely need the income. Others return because full retirement turned out to be less satisfying than the planning made it seem. Both are legitimate reasons.

What I want is for you to make that choice with accurate information. Run the provisional income calculation. Compare your expected retirement income against the IRMAA thresholds at medicare.gov. Check the current year’s Social Security earnings limit at ssa.gov if you’re collecting before full retirement age. Spend an hour with a fee-only planner if the numbers are complicated.

Dennis went to work at the hardware store. The math worked in his situation, the social connection was real, and he stopped watching television in the afternoons. That’s not nothing.

He called me in February to say he’d been named employee of the month. I told him that was probably worth more than the $4,760 in withheld Social Security benefits.

He agreed.

Glenn Suttner is a CFP and the Money and Retirement columnist for the Sunday Evening Review. He has worked in fee-only financial planning for thirty years and holds no financial interest in any fund company, brokerage, or advisory firm. Questions can be sent to the Sunday Evening Review editorial desk.