Many older Americans are learning the hard way that you can’t retire on Social Security alone.
In an ideal world, you’ll kick off retirement with a nice pile of savings you’ve built up through the years. In reality, many older American end up retiring on Social Security alone. And people in that boat unfortunately risk a world of financial hardship — especially when Social Security benefits don’t rise very much from one year to the next.
Such is the case for 2025. Recently, the Social Security Administration announced that benefits would be rising by 2.5% in the new year. And while that’s certainly not the smallest Social Security cost-of-living adjustment (COLA) on record, it pales in comparison to recent COLAs.
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Meanwhile, The Motley Fool surveyed 2,000 retirees to get their thoughts on 2025’s Social Security COLA. And the results were eye-opening.
A good 54% of respondents said they think next year’s COLA won’t be sufficient. And a surprising 50% said they’re considering a return to work because they can’t manage on their Social Security benefits alone.
If you’re in a similar boat, you may be contemplating a return to work to some degree as well. And here’s why you should.
It’s not just about financial benefits
If you’re facing a financial shortfall based on your current retirement income, whether it consists solely of Social Security or not, then returning to work in some capacity is a good idea. A separate paycheck from a job could give you the financial breathing room you need to cover your recurring expenses and have money left over for extras.
Furthermore, you may find that working as a retiree is good for your mental and physical health. Some retirees fall into the trap of staying home for much of the week — either because they’re not motivated to get out or because they don’t have the money to participate in different activities.
But being persistently bored could wreak havoc on your outlook and wellbeing. Working helps solve for that by serving as a way to keep busy and a reason to venture out into the world.
Also, some seniors risk health issues due to having too sedentary a lifestyle. Working might force you to get moving, which could help stave off medical issues.
Working while collecting Social Security
There’s no reason to assume that you can’t earn money from a job while you’re on Social Security, because you absolutely can. The only thing you’ll need to be mindful of is the program’s earnings-test limits. These apply to you if you’re working and collecting benefits before having reached full retirement age.
In 2025, you can earn up to $23,400 without having any of your Social Security income withheld. From there, you risk having $1 in Social Security withheld per $2 in earnings.
If you’ll be reaching full retirement age in 2025, you get a higher earnings-test limit of $62,160. From there, you risk having $1 in Social Security withheld per $3 of earnings.
You should also know that if you exceed the earnings-test limit and end up having some of your Social Security income withheld, you won’t be giving it up forever. Any withheld benefits are simply added back into your monthly payments once your full retirement age arrives. However, given that next year’s earnings-test limits are pretty generous, it’s very possible to avoid exceeding them so you don’t lose out on any Social Security in the near term.
It’s not surprising to learn that many older Americans aren’t happy with their 2025 Social Security COLA. If you feel that your finances are about to take a turn for the worse, start looking into options for going back to work. You may be surprised at how much good it does for you on a whole.