While many people dream of an early retirement, people who are actually facing their retirement sometimes wish for the opposite – a return to work. According to Pew Research Center, the size of the older workforce has nearly quadrupled since the mid-1980s. Approximately 19% of people aged 65 or older are employed; that’s about 11 million people.
Some people simply never stop working. Others retire but then decide to return to work. There are many reasons for the decision to work during one’s golden years, ranging from financial to personal. If you’re wondering about working during retirement, make sure you understand the pros and cons.
The Pros: Why Working Part Time After Retirement Can Be Good
The most obvious upside of working part time after retirement is the paycheck. Many people are struggling to save enough for retirement. Increased longevity, while generally viewed as a good thing, also means that people need to plan for even longer retirements. High inflation rates have also caused many seniors to doubt whether their savings is sufficient. Earning a paycheck is a practical way to make retirement savings stretch.
But even people who don’t need the money might find plenty of reasons to go back to work. Many people identify themselves based on their job. Without a job, they may struggle to find meaning and purpose. Going back to work part time can give them something to do so they don’t become bored.
Loneliness can become a problem during retirement. If a person’s social circle is centered around work, leaving work can mean losing close connections with friends. A part-time job can give people more social interaction.
A part-time job can also help people stay physically active. Even a desk job may require people to walk to and from the office, which is more physical activity than they’d get staying at home all day. Of course, there are other ways to exercise, but not everyone takes advantage of them. Work gives people a reason to get up in the morning and face the day.
The Cons: Why Working During Retirement Can Be Bad
Working part time during retirement is not always a good idea. First of all, the financial situation can get complicated. Although a part-time job brings in income, this income may have unintended consequences.
People who start taking Social Security retirement benefits before reaching full retirement age may see a reduction in their benefits if they return to work and earn more than the annual limit. For 2024, the annual limit is just $22,320.
Income can also have an impact on Medicare costs. In 2024, the standard monthly premium for Medicare Part B is $174.70, but individuals earning more than $103,000 and couples earning more than $206,000 have to pay an income-related monthly adjustment amount (IRMAA) that increases this cost. There’s also an income-based surcharge for Medicare Part D premiums.
In addition to the financial issues, working can also result in stress and fatigue. For a person already dealing with declining health, even part-time work may be too difficult, leading to more health problems. People who work with the public may also have a higher risk of contracting infections like COVID-19 or the flu, further risking their health.
Work can also tie people down. Retirees often want to move or travel, and that can be difficult with a job. People who work during retirement will also have less time for hobbies and social activities.
How to Decide if You Should Work During Retirement
Deciding whether or not to work during retirement is a very personal decision. Examine your unique situation before making a choice.
- Look at your finances. Do you need the extra income, or would it cause more harm than good? If you don’t need the money, volunteer work might be a better option for you.
- Look at your plans to travel and move. Do you want to travel or move? Consider how a job would impact these plans.
- Look at your hobbies. Do you want to dedicate more time to your hobbies? A job might get in the way. On the other hand, if you don’t have many hobbies, a job might give you something to do.
- Look at your social life. Do you know most of your friends from work? Without a job, you may need to find a new social circle.
- Look at your health. Are you healthy enough to continue working? Think about how a job might help keep you active or wear you out.
- Consider phased retirement. If you’re interested in having more time to enjoy your golden years but you’re not quite ready to go cold turkey on work, phased retirement could be the perfect option.