Should You Work After Retirement?

Are you thinking about returning to work after retirement? You might want to earn some extra income, stay social, or create more structure in your daily routine. Whatever your reason might be — and whether you’re already retired or are getting ready to leave the workforce in your current capacity — yes, you can work after retirement. Learn more about what to consider, including the benefits and financial implications of getting a new job in this phase of your life.

Benefits of working after retirement

There are many reasons to work after retirement. Finances, savings, and benefits are just a few things to consider.

Financial stability

Your financial situation is one of those elements that will remain important throughout your life. Although you may have saved in preparation for retirement, you might not feel comfortable relying only on your savings to fund your lifestyle. Even part-time income can help offset some day-to-day expenses. You may even earn enough to continue to build your savings.

Health insurance benefits

Benefits matter too. Health insurance can be a large expense. If your new employer offers health benefits, this might be a helpful option. If you retire before you’re eligible for Medicare at age 65, covering healthcare costs on your own can be costly; working for health benefits might outweigh the tradeoff in your free time.[1]

A new job

Pursuing a passion can now be a reality. In retirement, you can take on a new job role that may not have made sense during your active working career. Maybe the salary range is far lower and prevented you from making that move, and now you can afford to make the change. You might also choose to keep working to enjoy a different form of mental stimulation than your previous career provided.[2] If returning to work seems like too much of a leap, consider these side jobs.

Social interaction

Staying connected to others is important. The social aspect of working isn’t something to discount. Staying socially active can help keep you mentally sharp and help you feel younger. Working may even help delay the onset of dementia and other age-related illnesses.[3] If you enjoy working and feel healthy enough to do so, there’s no reason not to continue to work in some capacity.

How working can impact Social Security benefits

If you retire from your job but aren’t 65 yet, you might want to delay collecting Social Security and your personal retirement accounts. Waiting to claim means getting larger payments when you do finally start receiving Social Security.[4] If you can bridge any financial gaps by working, this means you’re also still contributing to Social Security through taxes. Learn more about financial planning if you choose to work past the age of 65.

Points to consider if you want to work after retirement:

• Social Security benefit amounts are tied to your age and could be affected if you choose to work. Learn more about those potential conflicts with the Social Security Administration’s Retirement Earnings Test.[5]
• Check with your employer’s benefits coordinator about your pension prior to retiring. Plans have different rules, and in some cases, you can draw on your pension and continue to work.[6]
• Taxes can be an issue. Depending on your age, your benefits may be taxed.[7] Income thresholds determine the point at which your Social Security is taxed. The type of work you take on affects this, too. These tax time tips may help make taxes less confusing.
• When you reach age 72, you’ll need to take some sort of payout from your retirement accounts, even if you haven’t tapped into them yet.[8] The exception is your 401(k) from a current employer, as long as you continue to work there. Factor this in to make sure you don’t go over the income thresholds and end up losing money. Check with a tax professional to fully understand your unique financial picture and the possible tax implications. If you’re working and also drawing on your retirement, this could put you into a higher tax bracket.[9]

There are various elements to consider, like your age and any tax implications, but your personal desires are important to factor in, too. With a plan for retirement, you can continue to earn money and enjoy all the social benefits that a job can offer.

Learn more about your sources of income in retirement. This may include a combination of Social Security, personal savings, investments, and more.

The information included in this article is for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations and to make their own decisions about how to operate their business. Nationwide Mutual Insurance Company and its employees make no guarantee of results and assume no liability in connection with any information provided.  Nationwide, the Nationwide N and Eagle, and Nationwide is on your side are services marks of Nationwide Mutual Insurance Company. © 2020 Nationwide.

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[1] https://money.usnews.com/money/retirement/second-careers/articles/2019-05-22/the-pros-and-cons-of-working-in-retirement; https://www.moneycrashers.com/reasons-working-after-retirement/

[2] https://money.usnews.com/money/retirement/second-careers/articles/2019-05-22/the-pros-and-cons-of-working-in-retirement

[3] https://www.moneycrashers.com/reasons-working-after-retirement/

[4] https://www.moneycrashers.com/reasons-working-after-retirement/

[5] https://www.ssa.gov/policy/docs/program-explainers/retirement-earnings-test.html; https://www.aarp.org/retirement/planning-for-retirement/info-2018/going-back-to-work-ss.html

[6] https://employment.findlaw.com/wages-and-benefits/if-i-retire-and-begin-receiving-my-pension-can-i-still-work.html

[7] https://money.usnews.com/money/retirement/second-careers/articles/2019-05-22/the-pros-and-cons-of-working-in-retirement

[8] https://www.efile.com/retirement-plan-required-minimum-distribution-ira-401k/

[9] https://money.usnews.com/money/blogs/on-retirement/articles/2018-03-23/7-reasons-you-shouldnt-work-in-retirement