Many older Americans are learning that relying solely on Social Security to fund their retirement may not be enough to maintain financial stability. Ideally, retirement would be accompanied by a healthy amount of savings accumulated over the years.
However, the reality for many is that Social Security becomes their primary, or even sole, source of income, which often leads to financial strain—especially when benefit increases don’t keep up with rising costs.
For 2025, the Social Security Administration announced a 2.5% cost-of-living adjustment (COLA). While it’s not the smallest increase on record, it’s considerably less than recent adjustments, leaving many retirees concerned.
A survey of 2,000 retirees by The Motley Fool revealed that 54% believe the upcoming COLA won’t be sufficient to meet their needs. Even more striking, 50% of respondents are considering returning to work because they can no longer manage on Social Security alone.
Why Returning to Work Makes Sense
If you’re in a similar situation, you might be thinking about re-entering the workforce. This could offer a much-needed financial boost, providing extra income to cover daily expenses and allowing for a bit more breathing room for discretionary spending. But it’s not just about the money.
Many retirees find that working offers additional benefits, such as mental and physical engagement. Staying home too much, whether due to financial limitations or lack of motivation, can lead to boredom and even affect one’s overall health. A part-time or flexible job can offer a sense of purpose, keep your mind active, and help you get out and about more frequently.
In fact, for some seniors, returning to work can counter the negative effects of a sedentary lifestyle, helping to keep the body and mind in better shape.
Can You Work While Collecting Social Security?
Absolutely. You can work and receive Social Security benefits at the same time, but it’s important to be aware of the earnings-test limits if you haven’t yet reached full retirement age (FRA). In 2025, you can earn up to $23,400 before any Social Security benefits are withheld. If you exceed that, $1 in benefits will be withheld for every $2 you earn over the limit.
If you’ll reach full retirement age in 2025, the earnings-test limit increases to $62,160, and only $1 in benefits will be withheld for every $3 earned above that threshold. It’s also worth noting that any benefits withheld aren’t lost forever. Once you reach FRA, those benefits are added back to your monthly payments.
With generous earnings-test limits, many retirees can work part-time or take on small jobs without worrying about losing a significant portion of their benefits.
Taking Action for a Better Retirement
It’s understandable that many retirees are frustrated with the modest Social Security COLA for 2025. If you feel like your financial situation is becoming strained, consider exploring job options that fit your lifestyle and preferences. Working can provide both financial and personal rewards, helping you maintain stability and enjoy retirement on your terms.