John, 61, is set for retirement.
He was approved for Social Security, and then, just before he was about to give his notice, was laid off by his employer, an added bonus that meant his severance would cover him until the month his Social Security checks start.
The only catch is that as he’s not yet 65 he’d have to bridge health insurance on his own.
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An opportunity then arose that made him reconsider his plans.
John’s employer offered him a team-leading, client-facing role in a department he’s always wanted to join. The pay and benefits are strong.
He’s tempted, but he can’t see himself working beyond the end of the year. He also wonders if it’s fair to take a leadership job he intends to leave soon.
That’s the core of his dilemma. Here’s what else is at stake.
What’s his situation?
Let’s say John is married. His 60-year-old spouse has been on his employer plan and is two years from Medicare eligibility.
The couple has roughly $1 million saved — about $940,000 in 401(k) and IRAs and $60,000 in cash — with a nearly paid-off mortgage.
Americans believe they need about $1.26 million to retire comfortably in 2025, so John and his wife may be within striking distance even without maximizing Social Security — but are not quite at the “magic number.”
Working longer would obviously boost their retirement savings. However, for John, the new job may be about more than just money.
Many older Americans say work offers more than a bigger retirement pot, access to health insurance and Social Security benefits. Respondents to the University of Michigan’s National Poll on Healthy Aging claimed other important factors include having a sense of purpose, contributing to society, keeping their brain sharp and maintaining social connections.
Would working longer help substantially?
Taking the job could help John in four ways.
- 1. Social Security. If John begins withdrawing Social Security at 62, he will receive about 30% less in monthly benefits than if he waits until the full retirement age (FRA) of 67.
Moreover, if he waits until 70, he’ll earn “delayed retirement credits” of about 8% per year. In other words, the longer he holds off, the more he will get.
If John has already filed, he generally has up to 12 months to withdraw his application and repay any benefits to reset the clock.
Another point worth bearing in mind is that if John works before the FRA while claiming, the earnings test can temporarily withhold benefits once he earns above annual limits, which is $23,400 in 2025 and $62,160 in the year he hits FRA.
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2. Health insurance. Staying employed until he is 65 can help John avoid expensive pre-Medicare premiums.
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3. Increase savings. Working for even 12–24 months allows him to top up his accounts and possibly utilize the age-based “super catch-up” provisions of up to $34,750 in 2025 for individuals aged 60–63.
*4. Health and happiness. There’s also a non-financial upside: older adults who keep working often report stronger mental and overall well-being. If the new role is genuinely interesting, John may enjoy staying in the workforce a bit longer.
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What should John do?
John is in the lucky position of having a choice.
The benefits of taking the new client-facing, team-leading job include being better off financially and perhaps physically and mentally as well. If he loves the work, values the benefits, can pause his Social Security claim, and is willing to give the role a good two-year run, then he should take the job.
A simple way to square ethics with opportunity is to accept that he can commit to 18–24 months and be transparent about a limited horizon.
Conversely, if John’s determined to stick to his plan of retiring within a year and happy with the money he’s already saved, he may be better off turning down the offer. Exiting in under a year can create transition pain — and possibly bruise his relationship with his employer and colleagues.
Overall, John is in a good position either way. If the job is truly the dream, the benefits argue that he should do his last lap for two years. By then, he can retire on his terms. But he’s also in a good position to retire now and cover pre-Medicare insurance without straining the plan.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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