The Lowdown on Working During Retirement

Before the Industrial Revolution, the concept of retirement as we view it today didn’t really exist, except perhaps among the wealthy. But modern civilization brought with it the possibility of being able to spend one’s final years in relative comfort without having to work until it was no longer physically possible. The post-World War II era in America saw many companies providing handsome pensions to their employees which comfortably sustained them through their declining years.

But several factors in recent years have combined to make the type of retirement that Americans have dreamed of since then impossible for many. The increasing longevity of both genders courtesy of modern healthcare has combined with the disappearance of corporate pensions and the uncertainty surrounding Social Security to force many “retirees” to continue working in some capacity after they have finished with their primary careers.


The Employee Benefits Research Institute conducted a consumer study in 2013 that assessed the retirement savings and financial readiness for retirement that covered a broad demographic base. Their findings were dismal. The study revealed that more than a third of pre-retirees in the lowest quarter of the income scale would run out of money within one year after retiring. Almost twice that many in this category would have that problem after 10 years and about 10% of those in the second lowest income bracket would be there as well. In fact, only about half of all workers are participating in a 401(k) or other type of retirement plan, and a large percentage of those are not contributing enough to fund any type of comfortable retirement.

Unfortunately, the logical option for many of those who face this dilemma (and their financial advisors if they’re lucky enough to have enlisted one) is to continue working in some capacity past the age at which they had originally planned on retiring. Workers who elect to bite the bullet and take this route typically have two options available to them. They can continue to work part or full-time at their current job or they can work part or full-time in another job or career. The right choice will depend upon several factors, including contentment at a current job, desire to do something else and physical health and stamina.


If you’re making good money at the job you at work now and are unlikely to replace your current earnings elsewhere, then your best bet may be to stay there for a few more years and get yourself onto a stronger financial footing. This can be especially smart if your employer offers a matching contribution in your retirement plan and if the additional earnings would allow you to pay off major expenses such as your mortgage.

As distasteful as this option can be for many, working longer can provide several major financial benefits above and beyond the possible mere addition to retirement savings. Staying at your current employer for another five years will materially shorten the period of time during which you will need to pay for healthcare out of your own pocket and can substantially increase your Social Security benefits. Those who take late benefits and get the maximum possible payment can get almost twice as much as those who elect to draw benefits at age 62.


If the pay and/or benefits at your current job aren’t enough to keep you there, then it may be time to explore other career options. You may not have to work full time for another 10 years, but this could be a good time to become involved in a cause that you’ve always believed in, such as volunteering or joining a community-focused group.

The internet has also made it easier than ever to start your own business, as you can now incorporate and register your company online and even file patents. Even a part-time job related to a hobby that you have always wanted to indulge in can be a major addition to your monthly cash flow. If you have always been interested in botany but never had the chance to find out much about it, then consider working as a cashier at a local floral shop or tending the gardens at a local park. Twenty hours a week at $10 an hour comes to an extra $10,000 per year, which is equal to a 4% annual withdrawal from a $250,000 investment portfolio.

The number of consulting jobs and legitimate work-from-home opportunities is also continuing to grow. Some companies now offer part or full-time positions that come with a full benefits package where people can log on to work from their home computers and put in a full shift without having to get out of their pajamas.


Although the idea of working during retirement probably doesn’t sound terribly appealing, this may be your best option in many cases. But enterprising workers who plan ahead can turn this obstacle into an opportunity to change their surroundings, learn new skills, achieve goals that they have put off during their careers and enrich both their lives and the lives of others. For more information on whether you need to work during retirement and what you could do, consult your financial adviser or career counselor.

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