If you’re close to retirement or have already exited the workforce, you’ve likely thought about how you’ll be spending your time. It’s common for retirees to pick up part-time work or look for income streams to keep busy and deal with the increased cost of living.
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Should retirees continue to work? We will examine the benefits beyond money and what to consider before taking on a new income stream.
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Why Retirees Should Continue Working
What are the reasons why retirees should continue working? Here’s what the financial experts had to say.
Something To Do
“I have many clients who continue to work just to have something to fill their time,” said Doug Carey, CFA and president of WealthTrace. “Many people derive a major sense of accomplishment through working, which is no small thing. Working in retirement can be a way to stay engaged and satisfied with life.”
Working in retirement can provide you with a sense of fulfillment so that you’re not feeling bored, especially if your friends haven’t retired yet. You may discover that you don’t mind part-time work or having something to look forward to.
“Many individuals find that retirement brings a significant change to their daily routine and social interactions, which can lead to feelings of restlessness or a lack of purpose,” said Chad Harmer, managing director at Harmer Wealth Management in Ontario. “Working part-time or engaging in volunteer work can provide a sense of structure, purpose, and social engagement that is crucial for mental, physical, and emotional health.”
See: Retirement Planning: How Much the Average Person 65 and Older Spends Monthly
Struggling With Expenses
“From a financial perspective, if a retiree requires additional income to cover basic living expenses or to maintain a desired lifestyle, continuing to work might indeed be essential,” Harmer said. “This could involve part-time employment, consulting, or even turning a hobby into a source of income. The key here is to ensure that the work is manageable and does not negatively impact their health.”
If your expenses are higher than anticipated, you may want to look into finding an income stream to help offset this to alleviate any financial stress.
Financial Need
“If you don’t have enough saved for retirement, which most people do not these days, working part-time or on a flexible schedule can help supplement your income and provide financial security,” Carey said.
With high inflation figures and higher interest rates, it’s not a secret that many Americans are struggling to get by. When planning for retirement, it can be difficult to factor in inflation and many people didn’t believe that prices could go up as much as they did.
Passion Projects
“Retirement can be an opportunity to explore new interests or pursue a passion project,” according to Carey. “If your passion aligns with a potential income source, working in this capacity can be rewarding.”
The good news is that you can focus on an income stream you enjoy in your golden years instead of choosing the most practical option. This would be the perfect opportunity to pursue an interest or hobby that you had in your younger days.
Staying Active and Social
“Work often provides a social and structured environment,” Carey said. “Continuing to work, even part-time, can help you stay active, mentally sharp, and connected to others.”
When you retire, you may realize that you miss the social connection. Continuing to stay employed will help you with your social life.
You Can Find Flexible Work
When you were employed during your career, you likely had a strict schedule that you had to follow. As a retiree, you can find flexible work so that you have the option to bring in some extra money and stay busy when you need it. Then you can travel when you’re ready since you’re not tied down.
“Seek jobs or roles that offer flexible hours or the ability to work from home. This flexibility can make working more enjoyable and less stressful during retirement,” Harmer said.
You Can Apply Your Knowledge
“Use the skills and experiences you’ve accumulated over your career to find work that might be less demanding but still intellectually stimulating and rewarding,” Harmer said.
Even though you’re retired, it doesn’t mean you can’t share your knowledge with the younger generation.
You Can Volunteer and Give Back
“If financial gain is not the primary motive, consider volunteering,” Harmer said. “It can offer many of the same benefits as paid work, including social interaction and a sense of purpose, without the pressures of a traditional job.”
You may discover that your true calling is in volunteering and giving back to your community.
Work in Retirement Considerations
While working in retirement can come with perks, it may not be the best idea for everyone. Here are a few key points to consider about working as a retiree.
Regularly Review Your Finances
“Evaluate your financial situation to understand if you need to work for financial reasons or if you’re doing it more for personal fulfillment and social interaction,” Harmer said. “This will help guide the type of work you might seek.”
It’s crucial that you review your finances to ensure that staying employed makes sense. If you have enough money to cover your expenses, you can volunteer at your leisure instead of seeking a traditional job.
Health-Related Issues
“I caution my clients to be careful when relying on working in retirement to meet expenses,” Carey said. “Depending on the nature of the job, work-related stress can persist or even increase during retirement, which could negatively impact one’s health.”
You’ll want to monitor your health so that you don’t overexert yourself in your golden years. Staying healthy is vital to enjoying your retirement.
You Have To Focus On Retirement Income Streams Ahead of Time
“Some people can experience health issues that make it challenging to work in retirement, limiting their options,” according to Carey. “This is one more reason it is so important to have enough saved to cover expenses in retirement.”
If you still haven’t left the workforce, you may want to speak with a financial advisor to ensure you have the funds to retire.
Look Into Retirement Taxes
“Understand how working might affect your retirement benefits, such as government pensions,” Harmer said. “In some cases, earning too much can lead to reduced benefits or increased taxes.”
You’ll want to regularly go over your tax situation to confirm that working makes sense from a financial perspective.
Closing Thoughts
Deciding if you should continue working as a retiree will be a personal choice based on a variety of factors. While it might make sense for some to keep a job in their golden years, others may want to consider volunteer or charity work.
Harmer concluded:
“Ultimately, the decision to work during retirement should align with personal and financial needs, as well as a retiree’s desires for how they want to spend their retirement years. It’s about finding the right balance that allows an individual to enjoy this phase of life while maintaining health, financial stability, and a sense of purpose.”
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This article originally appeared on GOBankingRates.com: Retirement Savings: Should You Continue To Work as a Retiree?