You’ve saved, planned, and finally, finally reached retirement. But then comes the question: What’s next? For many, the answer is a surprising one—heading back to work. Working in retirement, sometimes called unretirement, is more common than you might think.
Why would anyone unretire? The reasons vary. Some need the financial boost, others crave social interaction, and many miss having a purpose tied to a job they love. Whatever your motivation, here are some key questions to help you decide if returning to work after retirement is right for you.
How Returning to Work After Retirement Affects Your Finances
Retirement often looks different from what is expected. Many Americans lack the necessary savings to maintain the same lifestyle in retirement that they had when employed. Others underestimate how long they'll live after retirement and don't have enough saved to last the rest of their lives. One obvious benefit of going back to work is the earned income.
It makes sense that many retirees return to work because they need money. But adding income doesn't just affect your bank account and spending capacity. It could also impact your Social Security payments, health benefits, and pension.
Financial Factors to Consider Before Unretiring
How Does Unretirement Impact Social Security Benefits? If you’ve reached your full retirement age (66 or 67), earning additional income won’t affect your Social Security benefits. However, if you’re under full retirement age, your benefits may be reduced if your income exceeds certain limits.
Should You Use Employer Health Benefits or Medicare? Medicare kicks in at age 65, but higher income levels can mean increased premiums. If your new employer offers health benefits, you might save money by opting for that coverage and deferring Medicare.
How Could Returning to Work Affect Your Pension? If you’re working for a new employer, your pension likely won’t be affected. However, if you return to work for your previous employer, some plans might suspend benefits or include other restrictions. Check with your plan administrator to understand the rules fully.
The Social and Emotional Benefits of Unretirement
Retirement often brings a significant change to your daily life, including a reduction in social and intellectual stimulation. Many retirees return to work not for financial reasons but to reconnect with colleagues, stay mentally sharp, or pursue a passion.
Why Retirees Return to Work (Besides Money)
- Work-Life Balance: If money isn't an issue, consider a part-time or flexible-schedule job. Freelancing or consulting will give you control over your time and allow you to maintain a healthy work-life balance.
- Health and Well-being: Think carefully about the physical and mental demands of returning to work. Will the job enhance your well-being or reintroduce stress?
- Pursuing a Passion: Retirement can be a great time to turn a hobby or interest into part-time income, volunteer work, or even a second-act career. These roles often feel more purposeful and flexible than traditional jobs, offering activity, connection, and fulfillment without the demands of full-time work.
How to Successfully Transition Back to Work After Retirement
If you’re considering unretirement, here are some things to consider:
- Do Your Research: Understand how additional income might affect taxes, benefits, and Medicare premiums.
- Start Small: Consider part-time or remote work to ease back into a professional setting.
- Explore Your Interests: Use this opportunity to pursue work that aligns with your hobbies and interests.
How to Build a Financial Plan for Unretirement
Whether you’re thinking about unretiring for financial reasons or personal ones, careful planning is key. At Capital Wealth Management, we can help you assess how returning to work could impact your overall financial plan, including considerations such as Social Security and taxes, as well as long-term investment strategies. If you’re ready to explore your options, schedule an introductory meeting with us. Let’s work together to ensure your retirement aligns with your goals and lifestyle.
Jordan Hickey is a CERTIFIED FINANCIAL PLANNER® professional who helps clients create personalized financial plans. Based in Glastonbury and Wilton, CT, Jordan offers guidance on retirement, insurance, investments, and overall wealth management. Schedule a complimentary introductory meeting with Jordan.
This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete, it is not a statement of all available data necessary for making an investment decision and it does not constitute a recommendation. Prior to making an investment decision, please consult with your financial advisor about your individual situation.