Early retirement vs. working after retirement

A family sits down to dinner together.

Should you keep working or retire early?

That is the question on many a baby boomer's mind, and how you answer it has an impact on both Medicare and Social Security eligibility, with pros and cons to consider in either decision. We'll explore them here, in the context of planning carefully for either outcome.

What to consider when planning for early retirement

Maybe you've had a difficult year health-wise. Maybe your workplace has changed so much and it no longer feels like a good fit or your adult children need support with childcare for the grandkids.

Age factor: Should I retire at 60? Should I retire at 55? Should I retire at 62? Whatever age you're considering, you’ll want to understand the impact of reduced benefits on healthcare planning.

Medicare: Unless you are eligible due to a disability, you’re not eligible for Medicare until you turn 65, regardless of when you stop working.1

Social Security: Workers who retire early will receive reduced Social Security benefits, as much as 30% less. Use Social Security’s early or late retirement calculator to assess the impact.

Healthcare planning impact: Are you sure you won’t lose employer-sponsored insurance by retiring early? Find out before you make your next move. If you will no longer be covered, find out what health insurance for retirees under 65 will cost you and whether your budget can maintain the expense until Medicare kicks in.

Should I work past 65? What to know when planning for extended work

Perhaps you enjoy the structure and challenge of employment or your career. Perhaps it's an economically driven consideration. You may anticipate having more expenses than you are likely able to support without a steady stream of income. Here's what you should know about working past the retirement age:

Pros: Should I work past 65? Should I work past 70? Answering yes may extend employee benefits, as well as lead to a bigger pension, fulfillment in work, a larger nest egg or a higher Social Security benefit.2 An additional benefit? Coordinating your schedule with your spouse's, if he or she is still working.3

Cons: Be aware that opting to stay employed can impact Social Security and Medicare. At age 70 ½, required minimum distributions apply, and you’re required to withdraw from your individual retirement accounts.4 These withdrawals will be included in your taxable income (except for qualified distributions from a Roth account, for example).5

Age factor: You can work as long as you're healthy and inspired, age aside. However, your age does affect timing for Medicare and Social Security.

Medicare: It’s important to sign up for Medicare when you’re eligible to avoid late enrollment penalties.6 However, there are situations that may qualify you for a Special Enrollment Period, including being covered by a group health plan.7

Social Security: Generally, individuals working after age 65 collecting Social Security will see increased payments. Delaying retirement typically means your annual retirement credit percentage increases, which in turn increases your benefit.8 You can determine your full retirement age (65 or 67, depending on your year of birth) and calculate your benefits with this Social Security Retirement Age Calculator.opens link in new window

Healthcare planning impact: If you're still receiving regular income and employer-sponsored insurance, in addition to Social Security and Medicare benefits, you might not have difficulties paying for healthcare costs.

How do I make the best choice for my budget?

You've never been retired before, so it's impossible to know whether you’ll fully enjoy early retirement over extended work, or even if you’ll dislike working longer as much as you think you will. Finding a new purpose in retirement—unrelated to working longer or retiring sooner—is helpful in developing that next chapter more successfully.

Ultimately, you must make a choice. If you've given careful thought and consideration to both options, particularly regarding your healthcare coverage costs, then move forward in the direction you feel most confident.


  1. “Enrollment Before Age 65,” AARP, last accessed April 20, 2018, https://www.aarp.org/health/medicare-insurance/info-06-2008/ask_ms__medicare_10.html, opens new window
  2. Jane Bennett Clark, “6 Reasons to Work Past Retirement Age,” Kiplinger.com, last accessed April 20, 2018, https://www.kiplinger.com/slideshow/retirement/T037-S003-6-reasons-to-work-past-retirement-age/index.html, opens new window
  3. Ibid.
  4. “Retirement Plan and IRA Required Minimum Distributions FAQs,” IRS.gov, last accessed April 20, 2018, https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions#11, opens new window
  5. Ibid.
  6. “Getting Started with Medicare,” Medicare.gov, last accessed April 20, 2018, https://www.medicare.gov/people-like-me/new-to-medicare/getting-started-with-medicare.html, opens new window
  7. “Special Circumstances (Special Enrollment Periods),” Medicare.gov, last accessed April 20, 2018, https://www.medicare.gov/sign-up-change-plans/when-can-i-join-a-health-or-drug-plan/special-circumstances-special-enrollment-periods, opens new window
  8. “Early or Late Retirement?” Medicare.gov, last accessed April 20, 2018, https://www.ssa.gov/oact/quickcalc/early_late.html, opens new window

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