Why retirement jobs are more popular than ever

Retirement isn’t just for retiring anymore. A growing number of retirees keep working part-time and more full-time workers are now planning to do so when they retire. Here’s a look at the reasons retirees work, the type of work they take up, and whether a part-time job in retirement could be right for you.
 

More retirees seek retirement jobs

The proportion of retirees who continue to work has been on the rise for decades, as measured by the labor force participation rate for adults aged 65 and older. In 2004, 21.4% of people aged 65 to 74 were in the labor force (with a job or looking for a job). Twenty years later—now—this percentage has reached 26.9%.¹
 

Retirement jobs: part of a changing landscape

The increasing interest of retirees in retirement jobs shouldn’t be a surprise. A lot of recent trends are heating up this market. The gig economy, for example, makes it easier for retirees to work flexibly, taking on as little or as much work as they want. Another change, accelerated by the pandemic, is the growth of remote work, which is especially attractive to seniors who retired because they didn’t want to commute to an office, or those who have mobility challenges.

Entrepreneurship also fuels the interest in retirement jobs. Thanks to technologies such as web conferencing, it’s often easier than ever (not easy, but easier) for retirees to leverage their experience and contacts into part-time consulting or other businesses. And some employers now offer their employees “phased retirement.” It gives employees a chance to test retirement and take a retirement job or start a retirement business before they fully cut ties with their employers.
 

Reasons to take a retirement job

Retirees are taking retirement jobs for a range of reasons, both financial and non-financial.

Financial reasons

• Greater financial security. It’s the most obvious reason. Working supplements a retirement income that otherwise consists solely of savings and Social Security. When inflation spikes or unexpected expenses arise, that extra money can be crucial.
• Increasing Social Security benefits. Generally, the older you are when you start taking Social Security benefits (up to age 70), the larger your monthly payment. Income from a retirement job can help you put off seeking those benefits, allowing your monthly payment amount to grow.²
• Better health insurance. If you retire before Medicare kicks in, a retirement job can enable you to benefit from your new employer’s plan. And if you’re on Medicare, an employer’s coverage can supplement it.

Non-financial reasons

• Social engagement. Everyone needs social interaction for their mental health and well-being. Retirees – suddenly deprived of the company of their longtime work colleagues – may not get enough. A retirement job gives you a new group of people with whom to interact.
• Cognitive stimulation. Staying mentally active can help seniors maintain cognitive function and might help delay cognitive decline.³
• Sense of purpose. Many of us do better when we have a continued sense of identity and purpose. A retirement job can help provide that.
• Enjoyment. One study found that 47% of working retirees take up their retirement jobs because they enjoy them – and it’s a great way to stave off boredom or help prevent depression.⁴
   

Popular retirement jobs

There probably aren’t too many retirees working part time as steel workers or astronauts. But there are plenty of retirement jobs that offer a great balance of flexibility, personal interest, and skill utilization. Here are some of them:

• Consulting enables you to leverage your experience, expertise, and contacts.
• Teaching/tutoring also uses your skill set and provides a way to share your wisdom.
• Retail or customer service often provides flexible hours, whether in onsite retail, call centers, or from home.
• Freelance creative work lets you build a flexible part-time business based on writing, creative design, illustration or related skills.
• Non-profit work is a way to work and fulfill your personal passion at a museum, religious institution, or social welfare organization.
• Hospitality and tourism jobs in hotels, resorts, or tourist attractions can be set in desirable locations.
• Healthcare support in roles like medical receptionist or patient advocate enable you to mix with people in a life-enhancing environment.
   

Tax and benefit implications of retirement jobs

If you’re planning to take a retirement job, or even just considering the possibility, you need to know about its potential impact on your taxes and benefits, including Social Security and Medicare.

If you’re under full retirement age and earn more than certain thresholds, a part-time retirement job could temporarily reduce the amount of your monthly Social Security check.⁵ The extra money from the job could push you into a higher tax bracket, possibly increasing your overall tax liability. Check with your accountant or financial professional to assess your situation.

Working at a job in retirement could also impact certain retirement accounts if you’re still contributing to a workplace plan, enabling you to delay taking required minimum distributions. If you’re 65 or older, the Medicare premiums you pay could go up if your income does.⁶
 

Is a retirement job right for you?

There’s a lot to think about when you’re considering a retirement job. Here are four steps to get you started:

1. Assess your skills and interests. Identify opportunities that align with your expertise and passions.
2. Consider the financial implications. Your income would go up, but so might your taxes and Medicare premiums.
3. Explore flexible options. You’ve retired, or are thinking about retirement, to gain a much different work/life balance than you’ve had. How will a retirement job affect that? Look for flexible schedules and hours that will maintain the balance you want.
4. Stay informed. Your industry knowledge can get stale quickly if you don’t keep it up to date. Follow industry trends in your field of specialty.

And one more tip: You don’t have to go it alone when it comes to retirement-job planning. Speak with your financial professional to get the advice that’s right for you.