If you are retired and thinking of going back to work, you’re not alone. Shrinking nest eggs and declining home values are sending many older Americans back into the labor force, even if they’ve already started collecting Social Security benefits.

That can get complicated, especially for those who started taking benefits early, meaning before they reached their full retirement age, currently 66. Social Security recipients who work and are younger than 66 can lose benefits if they earn too much. Plus, the added income from a job can boost the amount of their Social Security benefit that is taxed.

But both those disadvantages can sometimes be outweighed by one key advantage, according to Social Security Administration spokesman Mark Lassiter. When those returning workers reach 66, the agency will recalculate their benefits, based on their earnings and sacrificed benefits. The result can be a bigger Social Security check for life.

Here are the finer points of how those three different issues interplay and can affect your income when you return to work.

• Earnings test. If you are collecting benefits but are under the age of 66, your benefits will be reduced by $1 for every $2 you earn over $14,160 in a calendar year. If you are going to turn 66 this year, your benefits will be reduced less—by $1 for every $3 you earn over $37,680 in the months before your birthday. Once you’ve reached full retirement age, you can earn as much as you are able without reducing your benefits.

• Taxation of Social Security benefits. Benefits are taxed above certain income levels, and the formula for determining “income” is somewhat convoluted. Add together three figures: your adjusted gross income as reported on your federal tax return, the interest you earned on tax-free bonds, and half of your Social Security benefits.

If the total is above $25,000 ($32,000 for couples filing jointly), half of your benefits will be subject to income taxes. If it’s over $34,000 ($44,000 for couples), as much as 85 percent of your benefits will be taxed.

If your annual retirement income puts you on the cusp of one of those break points, earning additional salary could bump more of your benefits into taxable status.

Going back to work can be a particularly costly decision for people who find their benefits both shrinking and being subject to additional taxes. So it’s important to try and estimate how much you’ll earn that year and whether those earnings will offset the increase in taxes and lost benefits.

At the same time, you also have to keep in mind that the Social Security Administration may make those losses up to you when you turn 66.

• Recalculation of benefits. This happens when you turn 66 even if you’ve been working and collecting benefits all the way through, says Lassiter. The process offers two possible paths to higher benefits.

First, your Social Security benefits are calculated by averaging the salaries you earned in your 35 highest-paid working years. If you didn’t work for a full 35 years, zeros get averaged in. If going back to work at 62 or 63 replaces zeros or low-earning years with higher salaries, your benefits will go up. You can check your earnings history in the Social Security statement that is mailed every year to workers and former workers over 25.

The second adjustment may be more significant. If the earnings test reduced your benefits, the Social Security Administration will credit those lost benefits back to you as if they were months spent deferring your first Social Security check. For details about how this works, read the Social Security Administration’s publication “How Work Affects Your Benefits.”

Those credits add up. For people born in 1943 or later, benefits increase two-thirds of 1 percent for every month they’re deferred, or 8 percent a year, and that can raise your monthly check significantly after you reach full retirement age.

“Average that over a lifetime, and it balances out” the lost benefits, Lassiter says. “You recoup all of that money that was originally withheld because you retired early.”

That bigger check for life may make it worthwhile to head back to the office.

Linda Stern is a freelance journalist who writes about taxes and other financial issues.