I’m 71 and still working. I earn $108,000 a year. Am I doing the right thing?
Short answer: If you enjoy the work, your health is holding up, and the after-tax payoff meaningfully improves your financial security or lifestyle, then yes—continuing to work can be a very smart decision. The right call balances money, time, health, and purpose. Use the framework below to check your footing and, if needed, fine-tune your plan.
What the money says
– Your paycheck is a risk reducer. Every dollar you earn is a dollar you don’t have to withdraw from savings during a volatile market. That protects your portfolio from “sequence of returns” risk and can add years of longevity to your nest egg.
– Back-of-the-envelope retirement readiness check:
1) Annual core spending (after taxes, excluding big one-offs)
2) Minus guaranteed income (Social Security, pensions, annuities)
3) Equals your annual portfolio draw need
4) Multiply that draw by 25 to 30 to estimate the nest egg typically needed for sustainability
If you already have 25–30 times the gap saved (and a healthy cash reserve), you have the option to retire; if not, working longer sharply improves the math.
– Save deliberately while you can:
– Workplace plan: You can still contribute at 71. For 2024, the 401(k)/403(b) deferral limit is $23,000 plus a $7,500 catch-up if you’re 50+, for a total of $30,500. Pre-tax deferrals lower your taxable income and can help with Medicare premium brackets; Roth deferrals don’t.
– IRAs: Contributions are allowed at any age. Deductibility depends on income and whether you’re covered by a workplace plan. If you have existing pre-tax IRAs, “backdoor Roth” strategies can be complicated by pro-rata rules.
– Cash reserve: Target at least 12–24 months of essential expenses in T‑bills or a high-yield savings account before retiring. Your current earnings are the easiest way to fill that bucket.
Taxes, Social Security, and Medicare coordination
– Social Security: At 71, you’ve passed full retirement age, so the earnings test no longer withholds benefits. Additional high-earning years can slightly boost your benefit if they replace a lower year among your highest 35.
– Required minimum distributions (RMDs):
– If you were born 1951–1959, RMDs generally start at 73; if born 1960 or later, at 75.
– The “still-working” exception can delay RMDs from your current employer’s 401(k)/403(b) as long as you’re not a 5% owner. This does not apply to IRAs—you’ll owe IRA RMDs once you hit your RMD age even if you’re working.
– A planning twist: If your current plan accepts roll-ins and you’re not a 5% owner, you may be able to move pre-tax IRAs into the plan and delay RMDs on those dollars under the still-working rule.
– Qualified charitable distributions (QCDs): Starting at age 70½, you can donate directly from an IRA to charity (up to an annually indexed limit, $105,000 in 2024). QCDs are excluded from income, can satisfy RMDs when they begin, and can help with Medicare brackets.
– Medicare and IRMAA: Higher income can trigger Income-Related Monthly Adjustment Amount surcharges on Parts B and D. IRMAA uses a two-year lookback on your modified adjusted gross income (MAGI). In 2024, the first IRMAA thresholds start around $103,000 for single filers and $206,000 for married filing jointly. Your $108,000 wage, plus Social Security, investment income, and any distributions, could push you into a higher bracket if you’re single. Pre-tax 401(k) deferrals and QCDs can help manage MAGI.
– Health Savings Accounts (HSAs): You can’t contribute to an HSA for any month you’re enrolled in Medicare (even Part A). If you’re still on employer coverage and not enrolled in Medicare, HSAs remain incredibly tax-efficient; just be mindful of enrollment timing and the six-month Part A retroactive coverage rule when you eventually sign up.
– Roth conversions: The sweet spot for converting is often in lower-income years before RMDs and after Social Security starts—trickier if you’re earning $108,000. Consider partial conversions in any year where your marginal bracket is modest and you can stay under IRMAA thresholds. The 2026 scheduled sunset of current tax rates may also influence your timing.
Life energy and purpose
– Time is your scarcest asset. Work that energizes you, keeps you socially connected, and gives structure is valuable beyond the paycheck. If your job drains you or crowds out health, family, or long-postponed goals, that’s a cost you should “price in.”
– Try a rehearsal. If you’re unsure, negotiate a phased schedule (for example, 3–4 days a week or project-based work) and run a “practice retirement” for 3–6 months. You’ll learn quickly whether your spending, routines, and satisfaction line up without committing to a full stop.
– Health first. If work crowds out exercise, sleep, medical visits, or caregiving needs, consider scaling back. A strong body and mind are the best return on investment you can get at any age.
When staying on the job is “right”
– You like the work and your health supports it.
– After-tax income meaningfully improves your plan: you’re building a two-year cash buffer, paying off higher-rate debt, catching up retirement savings, or preventing withdrawals in a market downturn.
– You can reduce tax drag or IRMAA through pre-tax savings, QCDs, and thoughtful timing of income.
– You have clear goals for the earnings (not just letting cash accumulate without purpose).
When it may be time to pivot
– You already have ample assets (for many, 25–30 times the annual spending gap) and a solid cash reserve.
– Your marginal tax rate and IRMAA surcharges make the net value of work low relative to the time and energy cost.
– Health, caregiving, or major life goals are being deferred too long.
– You can replace most of the fulfillment of work with volunteering, board service, learning, travel, or part-time consulting.
A quick personal scorecard
– Financial sufficiency: If you stopped today, could you cover essential spending with Social Security, pensions, annuities, and a sustainable withdrawal from savings?
– Risk buffers: Do you have 12–24 months of essential expenses in safe reserves and a plan for big-ticket items (cars, home repairs, dental/vision, travel)?
– Tax/benefit efficiency: Do you understand how your current income affects Medicare premiums and taxes—and are you using the levers you have?
– Purpose and health: Are you gaining more from work than you’re giving up in time, energy, and relationships?
Tactical moves to consider this year
– Max out pre-tax 401(k)/403(b) deferrals if you’re managing IRMAA or in a higher tax bracket.
– If charitably inclined, use QCDs from IRAs (age 70½+) to lower income rather than writing checks.
– Evaluate rolling IRAs into your current plan to use the still-working RMD exception (if available) or, alternatively, plan for RMDs at 73/75 with a cash set-aside to avoid selling at a bad time.
– If you plan to retire soon, pad the cash bucket and line up a year-by-year withdrawal strategy that coordinates taxes, RMDs, and Social Security.
– Review Medicare enrollment status and coordination with employer coverage; watch the two-year IRMAA lookback.
– Update estate documents, beneficiaries, and powers of attorney; confirm account titling and transfer-on-death designations.
Bottom line
Working at 71 for $108,000 can be exactly the right thing—financially prudent, emotionally rewarding, and protective of your long-term security—if it aligns with your health and priorities and you’re thoughtful about taxes and benefits. The “right” decision is the one where your money plan supports your best remaining years, not the other way around. If you can articulate what the next dollar of earnings will do for your life—and you like the trade—you’re on the right path. If not, consider a pivot to part-time or full retirement and let your time, not just your balance sheet, drive the choice.
This article is general education, not personal tax or investment advice. A fee-only fiduciary planner can help tailor these ideas to your exact income, accounts, and goals.
