Will you still hold down a job after retirement? According to one survey, 75% of Americans believe they will have at least a part-time job after they retire, and 62% of those surveyed cited financial motivation as a primary driver. Working in retirement may be a choice or a requirement.
Other studies show that only 18% of the pre-retirement workforce feels “very confident” that they’ll have enough money for a comfortable retirement, and 24% said they were “not at all” confident.
For some, working past retirement is a positive option. Many people simply enjoy working for the sake of working, and some don’t plan on retiring until much later than normal so they can continue working in a career they love.
But for others, the idea of working after they’ve already hung up their hats can feel like an unwelcome burden or a stressful necessity.
If you’re not sure that you want to work after retirement, you’re worried that you’ll have to work even if you don’t want to, or you’re not sure what you could do for a job that would still be fulfilling without being stressful, here’s what you need to know.
Job-Related Retirement Concerns
Will your pre-retirement savings be enough to live on? How much will Social Security actually cover? What will you do in case of unexpected circumstances or health concerns? Will your investments be enough to generate income?
There’s also the unpredictability of it; you don’t know how long your retirement will last, what events will occur and how far your money will actually stretch. In this case, having a part-time job or a fallback plan may help some people feel more secure about their post-retirement life.
But assuming that retirees looking for work won’t continue on in the same career they had before retirement, there are also concerns about jumping back into the workforce, even part time, which may feel dismaying.
Will companies want older employees? Will there be physical or mental tasks that you may not be able to fully perform? Will it be fulfilling? Will it cover the bills without wasting too much time?
Those that want to work after retirement – whether due to a passion for a certain job, a desire to stay motivated and active or any other reason – may feel the same pressures as those forced back into the working world due to financial concerns.
Will you still enjoy your job when you could be doing other things? Will you need to switch careers? Will you need to take time off for health reasons? Will you still be able to enjoy the other benefits of the retirement lifestyle?
In these cases, a part-time job can also alleviate worry and provide a solid outlet for creativity and passion as long as the tasks associated with the job were manageable. But that doesn’t mean it’s the right solution for everyone.
Pros and Cons of Working in Retirement
There are a few pros and cons that retirees or those close to it may want to consider before filling out a job application.
- Additional income to cover expenses
- Busyness (for those wanting to be more active)
- Relational benefits (from socializing with co-workers, etc.)
- Sense of purpose or passion
- Less likely to dip into savings
- Greater flexibility with job choices
- Time commitment (for those wanting to have more free time)
- Potentially increased expenses (commuting, pet sitting, work-appropriate clothing, food at work, etc.)
- Income tax on earnings and potentially Social Security
- Lack of full-time benefits (if working part time)
- Potential age discrimination
- Increased stress (if there’s no passion for the job)
Another thing to consider is the impact on your Social Security benefits. If you work during retirement, you will technically be earning more over time, which can increase your benefits, especially if you retire after the age of 65. If you retire early, however, and earn income over a certain limit after you’ve started receiving retirement benefits, those benefits may be reduced. This limit is known as the retirement earnings test exempt amount.
Options for Alternative Retirement Income
So should you work after retirement? If you’ve weighed the pros and cons you should be able to determine which solution is the best for you. If you value your free time and don’t feel that you need the extra money, then taking your full retirement makes more sense.
On the other hand, if you’re concerned about money or your retirement savings, you may consider doing some part-time work or finding an alternative source of income. The good news is that there are options out there in either case.
For those looking for part-time work or are planning on switching careers post-retirement, some good options could include things like starting a business, working in retail, turning a hobby into a job, working or staying at your old job, consulting, volunteering, or even finding a job with a company that actively recruits seniors, like those listed by the AARP.
But if you weren’t interested in working part time, or you still don’t feel like a part-time job will be enough to pay all of your bills or give you the confidence you need to truly enjoy retirement, you can also invest. More specifically, you can become a cash flow investor.
Cash flow investing allows you to yield a certain percentage from your portfolio each month, giving you spendable income from your investments. Instead of buying assets with the hope of selling them some day to make a profit, you invest in assets with the potential to generate income for you now.
This gives you the ability to free up time otherwise spent working to actually enjoy your retirement years. Or, if you really liked working, you could do both with the freedom of disposable income.
Deciding whether or not to work during retirement will come down to the type of lifestyle you want to lead. If you truly enjoy your job or have always wanted to explore another career, retirement may be the perfect opportunity to pick up some extra work, make some money and pursue your passions.
But if you’re the type of person who wants to spend their retirement on a beach, or at the very least, not in an office, you will have to consider other options for generating income, including part-time work or investments that generate income for you.
Of course, generating passive income from your portfolio will give you the most freedom, and should you still choose to work, you will have greater flexibility in what you do and when you do it with cash flow investing.