Working in retirement: encore careers, gig work, and what changes beyond Social Security

What you’ll learn in this guide:

• How this guide differs from the Social Security earnings-test piece — and why both matter
• What self-employment and gig income actually owe in tax, beyond regular income tax
• The recordkeeping that gig and consulting work in retirement requires
• Why many people take on “encore” work for reasons unrelated to the paycheck — and why that’s worth naming explicitly
• Where to go for the specifics of your own situation

Two different questions, often conflated

“Can I work and collect Social Security” is one of the highest-volume Social Security sub-questions, and Working in retirement and Social Security: what changes covers the specific mechanics of the earnings test — the temporary benefit reduction that applies only to wage/self-employment income earned before full retirement age. This guide covers the broader question underneath it: what working in retirement actually involves financially, beyond that one specific SSA rule, including for people past full retirement age (where the earnings test no longer applies at all) and for the growing number of retirees doing freelance, consulting, or gig-platform work rather than traditional part-time employment.

The tax side most people don’t expect: self-employment tax

Anyone earning income as an independent contractor, consultant, or gig-platform worker (rideshare driving, freelance projects, tutoring, selling crafted goods) owes self-employment tax — currently 15.3%, covering both the employee and employer share of Social Security and Medicare taxes — on top of regular federal and state income tax on that earnings. This applies once net self-employment income crosses $400 in a year, a much lower bar than many expect, and it applies regardless of age or whether the person is also collecting Social Security or a pension. The IRS Gig Economy Tax Center is the authoritative source on what counts as reportable gig income and how it’s taxed.

Reporting income, even without a 1099

A common misconception is that income only “counts” if a platform sends a tax form for it. In fact, all earned income is reportable regardless of whether a 1099-K, 1099-NEC, or any other form was issued — including cash payments, goods, or services received in exchange for work. Gig-platform 1099-K reporting thresholds have shifted in recent years, but the underlying tax obligation to report income hasn’t — the IRS’s gig-worker filing guidance has the current reporting rules. Keeping a simple running log of income and deductible expenses (mileage, supplies, a home-office portion of utilities, if applicable) through the year avoids the scramble of reconstructing it all at tax time.

What’s deductible against gig or consulting income

Self-employment income is taxed on the net amount — income minus legitimate business expenses — which makes recordkeeping genuinely valuable, not just a compliance chore. Common deductions for retirees doing gig or freelance work include vehicle mileage (the IRS standard mileage rate is adjusted annually), supplies and equipment used for the work, and a portion of home expenses if a dedicated home office is used regularly and exclusively for the business. A CPA familiar with self-employment filings can confirm which deductions apply to a specific situation — the rules around home-office and vehicle deductions in particular have enough nuance that guessing isn’t a great strategy.

Why “encore career” is its own framing, not just “still working”

Not everyone who works past traditional retirement age is doing it primarily for the income. Many retirees describe taking on consulting work, starting a small business, or shifting into a different field (teaching, nonprofit work, mentoring) as much for structure, purpose, and social connection as for the paycheck — sometimes more so. That distinction matters practically: someone working primarily for meaning may make very different choices about how much to earn, what to charge, or when to scale back than someone working primarily to supplement retirement income, even though both face the identical tax mechanics described above. The purpose and identity side of this transition is covered from a different angle in Building a retirement identity, which is worth pairing with this guide’s financial mechanics rather than treating either angle alone as the full picture.

Where to go for your specific situation

The tax rules here are general and change periodically — self-employment tax rates, mileage rates, and 1099 reporting thresholds are all the kind of detail worth confirming against the current year’s IRS guidance rather than this guide alone. A CPA who handles self-employment filings, or the IRS’s own Gig Economy Tax Center, are the right places to work through the specifics of an individual’s income, expenses, and filing situation.