i'm not entirely sure. i suspect some live off retirement savings for those 3 years but others run the numbers and they can still end up ahead even if they exceed the cap of earnings. as an example (just cuz i know the numbers for the place my oldest used to work and they hired allot of retirees waiting for medicare)-
minimum 32 hours per week for medical (100% paid by employer/low cost deductable and copay-med/dental/vision), average wage for a low key non stressful job-$17.00 per hour so...........
$17 per hour @ 32 hours per week equals about $35,000 per year
ss cap on uncounted earnings is $21,240 so countable would be $13760 per year
ss deducts $1 for every $2 you earn above the cap so net ss loss would be $6880 per year
.......so (pre tax) ss loss is $6880, earnings gain is $35,000 equals $28120 in retirees pocket (before taxes) and free insurance.