Are you considering working after retirement?
It is a thought that crosses the minds of many older adults.
In fact, according to RAND, nearly half of retirees would return to work.
You might be missing a sense of purpose or a way to fill your time.
Or your financial situation might be pressuring you to reenter the workforce.
Either way, if you’re wondering why you should (or shouldn’t) keep working after retirement and how to make the best choice for you — keep reading.
Benefits of Working After Retirement
#1. A Secure Retirement
Retirement is known to be a time to relax and enjoy yourself, but that doesn’t mean you have an endless supply of money.
What’s more, life expectancy has increased by more than six years in the last two decades. This means that many older adults are facing the unfortunate reality of outliving their savings.
And with the rising costs of living, for some, it can be challenging to live comfortably on pension or social security income alone.
For instance, check out some of these annual costs for assisted living in the most expensive US states.
Even if the average person saves aggressively throughout their life, they might still not be financially prepared for retirement — that’s why many older adults continue to actively work on supplementing their income after retirement.
#2. Improved Health
We often underestimate the importance of social interactions in the workplace. Even part-time work can provide the motivation and opportunities for socializing that many of us need to stay healthy and happy in retirement.
On top of that, working presents daily challenges that keep you intellectually stimulated.
In fact, having mentally demanding work not only improves your cognition but also prevents cognitive decline in old age.
And the best way to stay mentally sharp and healthy is to continue doing what you love.
#3. Sense of Purpose
When you retire, it’s common to experience a sense of loss. Your job was probably an integral part of your identity, and many retirees feel like they’ve lost their sense of purpose.
In order to combat this feeling of emptiness and confusion that can come with retirement, many older adults return to the workforce.
According to AARP, a third (32%) of retirees have worked for pay since retiring and most (90%) did it because they wanted to stay active and involved.
By continuing to work after retirement, you can contribute with your knowledge and experience, which will result in greater personal fulfillment.
A BIG caveat: make sure your “retirement job” is something that energizes you. This is a great time to reinvent the way you contribute your skills and personality to the world.
In other words, don’t force yourself to pick up a job solely for the money. Whether it’s a cause that lights you up, or simply the social interaction you gain, be sure there’s an energizing quality to your work after retirement.
Not to mention, if you love your job, work can be a source of great joy and happiness.
Disadvantages of Working After Retirement
#1. Time Commitment
When you work full-time, it’s easy to feel like your time is no longer yours — every minute seems accounted for.
So after decades of this lifestyle, retirement is an exciting prospect. It can even give you a new sense of freedom — with an open calendar that you may not want to hand over to another job.
After all, retirement is a chapter in life where you can (and should) put yourself first again. And do that without feeling guilty about not spending every second working or checking off your to-do list (you know, the one that never seems to end).
The average older adult spends between five and eight hours on leisure and sports every day — the equivalent of at least a part-time job and maybe even a full-time one.
No matter how you slice it, when you sign up for working after retirement, it’s important to make sure the time and energy tradeoff is worthwhile.
#2. Increased Stress
It’s natural to want to stay active after retirement. For some, this means committing to a job just to get you out of the house. But if you do decide to keep working, make sure your job actually brings you fulfillment.
If your job is causing you more stress than happiness, then maybe it’s worth considering other options.
Plus, studies show that retirement leads to a substantial reduction in mental and physical fatigue and depressive symptoms, so it’s important to not add to a preexisting uphill battle.
#3. Social Security and Taxes
Working in retirement could impact both social security benefits and the amount you owe in taxes.
Before reaching full retirement age, you’re facing a reduction in social security benefits.
In addition to that, if your combined income is over the threshold, you can expect to pay taxes on security benefits, state and federal income, and medicare.
And depending on how much you earn, the percentage of income that Social Security replaces varies.
For instance, for a 65-year old in 2020 that meant a difference between 26-53% of income replacement:
In a nutshell, before taking a new job, consider the financial implications and plan accordingly.
Is Going Back to Work After Retirement Worth It?
Many people struggle to decide whether or not they should continue working after retirement. This is a very personal decision that depends on how you imagine your ideal retired life.
Here are some questions to help you find clarity:
- What is my primary motivator for working after retiring?
- How much time am I willing to invest?
- Do I want to make a career change?
- How long do I want to keep working?
And, of course, consider the financial ones:
- How much money do I need/want to earn?
- How will working in retirement impact my social security benefits?
- How will going back to work impact taxes?
Do What’s Right For You
When it comes to both money and life satisfaction, planning is key.
Whether you’re going back to work or not, knowing your goals (from a holistic view) can help guide the rest of your financial decisions.
So, deciding whether or not to work after retiring is so much more than just a financial decision — it’s about how this choice shapes your life quality and personal identity.
Of course, retirement means different things for different people.
If you want help figuring out your ideal retirement lifestyle and how to achieve it, schedule your free Breakthrough Session with Cyn Meyer directly using this link — she helps people just like you every day.