Should You Get a Job After You Retire?

For many, retirement signifies the end of their working career, bringing about newfound leisure and free time. Despite this, it’s not uncommon for people to get a job during their golden years. Going back to work can bring both fulfillment and a needed financial boost to those who need it.

While getting a post-retirement job can offer many benefits, it’s also important to understand how it impacts other aspects of your retirement plan. In this article, we’ll explain why it’s common for individuals to go back to work after they retire. You’ll also get an overview of the advantages and disadvantages to consider if you choose to become employed once again. Finally, if you do decide to work again, we’ll offer some tips to help you get started.

Why People Get a Job After They Retire

Chances are that the thought of working again might be the last thing to come to mind when you think of retirement. Spending decades of your life working and then going back to that after finally being done may sound foreign or unorthodox. However, over 20% of retirees in their 60s and 70s are doing just that.

Even with an iron-clad retirement plan that’s decades in the making, the thought of making your money stretch for the rest of your life can be intimidating. This is especially the case if you begin to aspire to a different lifestyle than you originally planned, such as one that involves traveling. Getting a job can provide additional income to help you achieve your desired lifestyle.

Anthony DeLuca, CFP, CDFA, expert contributor at RetireGuide.com, explains that an unforeseen consequence of retirement is that people “lose a piece of themselves.” This causes them to “struggle with transition regarding not only the amount of free time on their hands, but also maintaining a sense of purpose in society.” For this reason, people might get a job, even if it’s just part-time, to fill the void in their lives.

Additionally, Chris Urban, CFP, RICP, founder of Discovery Wealth Planning, likens retirement today as more of a “’work-optional’ phase of life.” Rather than simply choosing to not work, individuals now may be more inclined to get a job for the sake of “finding purpose” or “social interaction.”

How Working After Retirement Can Improve Your Finances

Beyond the social and mental benefits of working after retirement, doing so can also provide an important financial boost. As mentioned above, individuals often get a job during their golden years to bolster their current lifestyle or stretch, or even grow, their savings. By going back to work, one can add income on top of their current retirement savings, enabling them to live the life they want.

Generally, one must earn at least 70% of their pre-retirement income to live comfortably after their career ends. However, living solely off of your retirement income for the remainder of your life may seem intimidating or unfeasible. Inflation and the ever-increasing cost of living can stretch your retirement savings and income thin. For this reason, it’s common to work to “reduce the amount you would need to drawdown from your retirement/investment accounts to fund your lifestyle,” says Urban.

While working after you retire may impact your Social Security benefits negatively, it can also allow you to hold off on taking payments. Waiting until you reach your full retirement age (FRA) allows you to receive larger payments, with amounts capping out once you become 70 years old.

Finally, working during retirement gives you the ability to save and invest more, either to continue to grow your retirement or to prepare for upcoming expenses. As people age, health and long-term care expenses can quickly add up. By earning more during retirement, you can more easily prepare for substantial costs that can quickly deplete your savings.

Impact on Social Security and Pension

Returning to work, while often beneficial, can have implications for your Social Security benefits. DeLuca cautions that, put simply, “if you make too much, they will reduce your benefits.” More specifically, you can expect a reduction of your current benefits by “$1 for every $2 you make over the annual limit which currently sits at $22,320.” And, as soon as you “reach your full retirement age, the reduction moves to $1 in benefits for every $3 you make over $59,520.”

In addition to the decreases in payments that DeLuca describes, you should also be aware that earning more during retirement can cause your Social Security benefits to be taxed at a higher rate. Here’s how this breaks down:

• Individual tax returns
  • $25,000 to $34,000 of income may result in up to 50% being taxable.
  • Earning more than $34,000 may result in up to 85% of your benefits being taxable.
• Joint tax returns
  • Earning between $32,000 and $44,000 of income may result in up to 50% of your benefits being taxable.
  • More than $44,000 may result in up to 85% of your benefits being taxable.

Before getting another job, you should also consider whether it will impact your ability to receive payments from your previous employer’s pension, or defined benefit plan. Generally, you can go back to work and still receive payments from your former employer. The only caveat is if you go back to the same employer. Some, such as the state and federal government, may eliminate your benefits if you return within a certain window or at all.

How to Decide If Working Is Right for You

Working after you retire, while perhaps not what you pictured yourself doing at one point, brings substantial benefits that may improve your life. However, it may not be ideal for everyone. It’ll be up to you to weigh what’s important at this point in your life and whether being employed will help you get there.

DeLuca shares that, in his estimation, “it’s worth making the extra dollars” and taking the hit to your Social Security if “you are doing a job in retirement that you enjoy and provides purpose.” Ultimately, he says that you’ll likely find yourself “making up the lost social security with your earned income, and you are receiving invaluable benefits.”

After working for decades, it might seem scary to go right back to work because of the threat of stress or physical labor. Luckily, many jobs are conducive to retirees. For instance, DeLuca identifies becoming an “adjunct professor or tutor,” as well as a “tour guide or youth sports [official]” as potential opportunities.

If you need help deciding whether jumping back into the workforce is right for you, we recommend speaking with a financial advisor, such as a certified financial planner (CFP) or chartered retirement planning counselor (CRPC). To find one in your area, consider using this free matching tool, which will present you with up to three vetted options based on your goals and current financial situation.

Frequently Asked Questions

Is it hard to get a job after retirement?

This will depend on both the job you’re applying for and how long you stay retired until you go back to work. Your qualifications should typically match the job you’re applying for to give you the best chance of being hired. Also, if you decide to return shortly after stepping away from your career, the gap in your resume won’t be as significant in any hiring decisions as it would be if you waited several years.

Can I draw Social Security and still work a full-time job?

Yes, you can still receive government benefits while working full-time. Although, you should be aware that your monthly payments will be significantly smaller because of taxes and the cap on earnings to receive full benefits.

If you choose to work but still have yet to begin taking government benefits, it may be smart to wait as long as possible. Once you reach FRA, your payments will be significantly higher than if you began taking them at age 62.

Is it worth it to get a post-retirement job?

If getting a job adds a net positive to your life both financially and mentally, then it’s likely worth it. However, only you’ll be able to decide whether you should return to work. We recommend working with an advisor to evaluate your financial situation and goals. Then, you’ll be able to see how employment fits into your lifestyle.