What You Need to Know About Working During Retirement


November 23, 2022

4:04 min

Retirement age woman sitting at a table smiling with a laptop

Deciding to go back to work after retiring is a decision that can help you to build additional retirement income.

Working After Retirement

Should You Consider an Encore Performance?

Talk of retirement planning can bring up a mixture of excitement and uncertainty. Some people say they love the idea of having no schedule, want to spend all of their time with their grandkids, or travel the world. But when reality sets in, those ideas and expectations don’t always work out the way we had envisioned. You might be a little bored, need some additional funds, or want more of a routine in your life.

The good news is there are great options, and even benefits, for continuing to work after retirement! Like your favorite rock-and-roll group taking the stage for a few more songs, an encore career can be just the ticket for retirees who want to add a little something before they leave the stage. It can keep you in the game with enough of a work life to make things interesting while earning some extra cash. Your financial advisor can help you invest dollars earned which can prepare you for unexpected expenses and make the most of your hard work.

Why keep working after you retire?

  1. The opportunity to work in a field you love or are passionate about. Maybe you always wanted to help young people or have a gift for speaking in front of groups. You could teach part-time or work for a not-for-profit helping people gain valuable life skills, work in a floral shop, or write articles for a local publication.
  2. Gain a better quality of life. Studies show retirees who work have greater satisfaction and feel more purposeful. Being engaged with people at work can keep you on a schedule, give your life meaning, and help ward off depression and loneliness.
  3. Stay healthy. Those people who have gone back to work after retiring have less major illnesses than those who become completely sedentary. Keeping relationships strong and engaging with other people often improves longevity.
  4. Give back to the community. Your career may not have allowed you the time to help local businesses or non-profits, but now you could work for either one and thereby contribute to the greater good in your community.
  5. Using your brain is good for your brain. A post-retirement job will likely have you learning new skills which slows cognitive decline. Some say if you don’t use it you lose it, so using your knowledge and skills as well as acquiring new ones can keep you on your toes.
  6. Some extra cash. Your retirement income might seem adequate now, but an extra cushion is always a good thing. You may live longer, have unexpected expenses or need assistance with health or dental care. You can use the cash you earn for everyday extras or to take special trips and purchase items you didn’t know you would need.
  7. Health insurance. If you have retired before the age of 65, when you become eligible for Medicare, going back to work might be a great option so that you have access to a company medical insurance plan. Health care costs are continually increasing and having a predictable monthly premium can help you plan how much income you will need for retirement.

What else should you consider?

There are some additional financial issues to consider regarding working during retirement. Depending on your age at retirement, you’ll need to weigh your options for retirement income such as current Social Security benefits, pensions or personal retirement accounts. It’s a good idea to learn about the best ways to make the most of your Social Security benefits and to get advice from your financial advisor before you head back to work.

If you retired before your full retirement age (as determined by the Social Security Administration) which is between 66 and 67 for people born in 1943 or later, and you have filed for Social Security benefits, those benefits can be affected by employment earnings. If you have not filed for Social Security benefits, or you are at your full retirement age, you will only see gains in your benefits from working for a few additional years. Please visit the Social Security Administration’s website for all the details on full retirement age and maximum earnings.

You have likely worked for 30 years or more to get to retirement or to the brink of it. Take your time, check your options and make decisions for your best future. If you decide to take the stage one more time, it’s up to you.

While the tax or legal information provided is based on our understanding of current laws and has been gathered from sources believed to be reliable, it cannot be guaranteed. Federal tax laws are complex and subject to change. Neither LPL Financial, nor its registered representatives, provide tax or legal advice. As with all matters of tax or legal nature, you should consult with your own tax or legal counsel for advice.

Category: Retirement

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