Working in Retirement

The traditional view of retirement is changing, and it is changing quickly. For example, retirement was when you could travel or spend long days with your grandchildren. These days, however, increasingly, retirement still involves some amount of work.

The good news? Research suggests that working at least part-time in your retirement might be right for you, both financially and physically.

The key depends on what work you do and how you save the extra money you earn while taking on a part- or full-time job during retirement.

Need to Work or Want to Work?

The unfortunate fact is that many retirees have no choice but to work, at least on a part-time basis, during their retirement years.

That is because these retirees have not saved enough money to live comfortably during their retirement.

Levels of optimism and confidence from retirees that their retirement will remain financially secure have been steady, while retirees who feel very confident continue to increase. According to the 2021 Retirement Confidence Survey conducted by the Employee Benefits Research Institute, 7 in 10 workers remain positive towards their retirement, with 30 percent very confident.

However, the same study showed that 20 percent of retirees are not too confident or not confident at all in the financial security of their retirement.

In other words, many U.S. residents will need to work longer if they want to face a comfortable, happy retirement.

Of course, there are plenty of reasons people would want to work during their retirement years. For one thing, the world of work has changed. Fewer people are making a living doing manual labor. As a result, retirees can work longer if work mainly involves sitting in front of a computer screen or making telephone calls.

A June 2014 report by the Society for Human Resource Management (SHRM) references the new ‘retirement workscape.’ In this workscape, retirees will continue to find satisfaction from work even after they retire from their primary career.

The SHRM report outlines four different phases of the retirement workscape:

• Pre-Retirement
• Career Intermission
• Re-Engagement
• Leisure

Pre-retirement involves taking meaningful steps to prepare for their post-retirement career. Many human resources departments are even engaging employees who are getting ready to retire to explore ways that they might be able to continue work. Again, flexibility and finding work that is motivating are the key factors.

Once the retirement decision occurs, most retirees want to take a little time off or have a career intermission. That gives them the ability to relax, recharge and retool. Typically, this career intermission lasts about 2.5 years.

Re-engaging in the workforce lasts for about nine years on average, according to the SHRM report. However, that re-engagement comes with a new balance between work and leisure and a greater emphasis on flexible careers.

Finally, the fourth phase allows retirees to rest, relax, socialize and travel. That is the traditional view on retirement for most people. However, such traditions are changing or facing postponement to a later retirement stage.

Impact on Other Retirement Income

Financially, working longer will offer better protection for your other sources of retirement income. The extra monthly income you generate from work can help cover your insurance, grocery, and medical-care costs. That will reduce the need to tap into your retirement savings.

That extra income may allow you to hold off collecting Social Security benefits until later in life. Remember, the longer you wait to begin receiving Social Security, the more significant your monthly benefits will be. (This holds until you hit the age of 70. After this point, your monthly benefits will no longer increase.)

Choosing to work after you hit retirement age is an important decision. However, in suitable cases, doing so might provide you with the financial and health benefits that could make your retirement years better.