Working After Retirement: Public Pension Rules to Know

You've turned in your retirement paperwork, and then the phone rings. Your old district needs a long-term sub, or an agency wants you back part time. Can you say yes without putting your pension at risk?

Usually you can. But working after retirement comes with rules that catch people off guard. The wrong job in the wrong month can reduce a pension payment, or even cancel a retirement.

In this guide, I walk through how return-to-work rules operate in state pension systems and under FERS and CSRS. I also cover the Social Security earnings test and what a new paycheck does to your taxes and health insurance costs. Whether you're a teacher, a state or local employee, or a federal retiree, the questions to ask are the same.

Can You Work After Retirement and Keep Your Pension?

The short answer: it depends on who signs your paycheck.

Nearly every public pension draws the same line. Work for an employer outside your retirement system, and your pension is generally unaffected. Work for an employer inside the system you retired from, and return-to-work limits apply.

So a retired teacher who takes a job at a private school or a consulting firm usually keeps every pension dollar. The same teacher going back to a public school in the same state may face a waiting period, a cap on hours or pay, or both.

The reason is simple. A pension replaces a paycheck you gave up, and systems don't want to pay you both from the same pot. Each one writes its own rules for working after retirement, and no two sets match.

How State Pension Systems Limit Working After Retirement

Most state and local systems use some mix of four tools:

• A break in service. You must stay away from covered employers for a set time after your retirement date. Depending on the system, that can run from one month to a year.
• A cap on hours, days, or earnings. Once you return, you can only work or earn so much.
• A penalty for going over. This is usually a reduced or forfeited pension payment.
• Contractor rules. Many systems treat work done through a staffing firm, or as an independent contractor, the same as direct employment.

The details vary widely. Here are two named examples, which are illustrations and not rules for every plan.

Example: Texas TRS

The Teacher Retirement System of Texas calls its rules Employment After Retirement, or EAR. They apply to service retirees whose retirement date falls after January 1, 2021. Earlier retirees are generally exempt. According to the TRS Employment After Retirement brochure (September 2025):

• You must take one full calendar month off after your retirement date. Working for a TRS-covered employer during that month revokes your retirement.
• After that, you can substitute in a position that isn't vacant, or work one-half time or less, which TRS sets at up to 92 hours per month.
• If you combine substitute and half-time work in one month, the limit is 11 workdays.
• Full-time work requires a break of 12 full, consecutive calendar months.

If you go over, TRS uses a three-strikes process. The first violation brings a warning. The second requires you to repay the lesser of what you earned or your annuity for that month. After a third, you forfeit your annuity for each month you exceed the limits, and strikes do not reset each school year.

Work for an employer TRS doesn't cover carries no limit. And when a retiree works more than half time, the employer owes TRS surcharges that it may ask you to share, so ask before you sign.

Example: CalSTRS

California's teacher system caps dollars instead of hours. For the 2026–27 school year, a retired member can earn up to $59,565 in CalSTRS-covered work, according to CalSTRS. Earn more, and CalSTRS holds back your benefit until it has collected the excess.

That limit was $80,245 in 2025–26 and fell when a temporary increase expired. Check the current number every year.

CalSTRS also has a 180-calendar-day separation-from-service requirement. During those 180 days, your benefit drops dollar for dollar by anything you earn in covered work, with only narrow exemptions. Jobs at a private school, in private industry, at a public school outside California, or in the UC or CSU systems don't count toward either rule.

Sources: TRS Employment After Retirement brochure (September 2025); CalSTRS.com; OPM CSRS and FERS Handbook, Chapter 100. Rules apply to work for employers covered by each system.

Your system may look like neither example. Some cap earnings by calendar year, some count days, and some make exceptions for hard-to-fill jobs. Read your own system's return-to-work page before you commit.

Federal Retirees: Reemployed Annuitant Rules Under FERS and CSRS

Federal retirees face a different trade-off. If you retire under FERS or CSRS and later take a federal job, you become a "reemployed annuitant." In most cases your annuity keeps coming, but your new salary is reduced by the amount of that annuity, according to the OPM CSRS and FERS Handbook.

A few details matter here:

• Waivers exist. Agencies can ask OPM to waive the offset for hard-to-fill needs. With a waiver you keep both checks, but that service earns no added retirement credit.
• You can add to your annuity. FERS deductions continue while you're reemployed. Work the equivalent of at least one year full time and you can earn a supplemental annuity. At five years, you can have the annuity redetermined.
• Private-sector work is different. A job outside the federal government doesn't reduce a regular FERS or CSRS annuity. Disability retirees have separate earnings rules.

The catch for early federal retirees is the FERS annuity supplement, the bridge payment some retirees receive until age 62. It has its own earnings test, tied to Social Security's annual limit. OPM reduces the supplement by $1 for every $2 you earn over that limit. Wages and self-employment income count, wherever you earn them, while pensions, TSP withdrawals, and investment income do not.

How the Social Security Earnings Test Applies

Your pension system isn't the only one watching your paycheck. If you claim Social Security before your full retirement age and keep working, the retirement earnings test applies. For 2026, SSA.gov lists these limits:

• Under full retirement age all year: Social Security withholds $1 of benefits for every $2 you earn above $24,480.
• The year you reach full retirement age: It withholds $1 for every $3 you earn above $65,160, counting only what you earn before the month you reach it.
• From the month you reach full retirement age: There is no limit.

Only wages and net self-employment income count. Your pension, annuities, interest, and investment income do not.

Withheld benefits aren't gone for good. When you reach full retirement age, Social Security raises your monthly benefit to credit the months it held back.

This matters more for public servants than it used to. The Social Security Fairness Act, signed January 5, 2025, repealed the Windfall Elimination Provision and the Government Pension Offset. Many teachers and public employees now receive benefits, including spousal and survivor benefits, that used to be reduced or wiped out.

If you collect one of those before full retirement age and go back to work, the earnings test now applies to real money. I cover the repeal in more depth in my guide to Social Security after the WEP and GPO repeal.

What a Paycheck Does to Your Taxes, Medicare, and ACA Subsidy

Even when your pension is safe, working after retirement stacks a paycheck on top of pension income. In my experience, these five side effects come up most often:

• A higher tax bracket. Your pension fills the lower brackets first, so wages are taxed at your top rate. For a married couple filing jointly in 2026, the 22% bracket starts at $100,801 of taxable income (IRS).
• More of your Social Security is taxed. As other income rises, up to 85% of your benefit can become taxable.
• A smaller senior deduction. The temporary $6,000 deduction for taxpayers 65 and older (2025 through 2028) phases out above $75,000 of modified adjusted gross income for single filers and $150,000 for joint filers.
• Higher Medicare premiums. Medicare's income surcharge, called IRMAA, looks at your income from two years earlier. In 2026 it starts above $109,000 for single filers and $218,000 for joint filers, and one dollar over triggers the full tier. A big work year at 63 can raise your premiums at 65.
• A lost ACA subsidy. If you retired before 65 and buy Marketplace coverage, the premium tax credit ends at 400% of the federal poverty level for 2026. That is $62,600 for a one-person household and $84,600 for two in most states. A paycheck that pushes you over can cost you the whole subsidy.

None of this means you shouldn't work. It means you should measure the job by what you keep, not by what it pays. For the health insurance piece, see Early Retirement and ACA: Your Income Determines Your Subsidy (2026) and Roth Conversions and IRMAA: A Strategic Guide to Minimizing Lifetime Taxes.

Five Questions to Ask Before You Accept the Job

1. Is this employer covered by my retirement system? Ask even if a staffing firm or contractor would pay you.
2. How long must I wait? Count from your effective retirement date, and get the answer from your system in writing.
3. What is my limit, and who tracks it? It may be hours, days, or dollars. You are responsible for staying under it, even if your employer does the reporting.
4. Will this job cost me anything? Ask whether you'll share an employer surcharge, or pay contributions that earn no new credit.
5. What does this income do to everything else? Run it through Social Security, your tax bracket, Medicare premiums, and any ACA subsidy.

FAQ: Common Questions About Working After Retirement

Conclusion

Working after retirement can be a great move. It adds income, keeps you connected, and can let your savings grow a few more years. But the rules depend on your pension system, your new employer, and your age, and a mistake can cost a month's pension or more.

Before you say yes, confirm the waiting period and limits with your system, and look at what the extra income does to your taxes and benefits. If you'd like help running those numbers for your situation, I'd welcome the conversation.

Authoritative references: Teacher Retirement System of Texas, "Employment After Retirement" (September 2025); CalSTRS, "Working after retirement" and "Limits"; OPM, CSRS and FERS Handbook, Chapter 100, "Reemployed Annuitants"; OPM, FERS annuity supplement FAQ; SSA, "Receiving Benefits While Working"; IRS 2026 inflation adjustments; CMS 2026 Medicare Part B premiums.