Working after retirement shouldn’t be your backup plan

Retirement should be an enjoyable and rewarding period of your life. But if you don’t have enough savings in place, it could turn into a decades-long struggle. Many retirees, or would-be retirees, plan to have jobs after retirement, as casual or part-time employees, to cover unexpected expenses. But working after retirement is not always possible, so it should not be your sole backup plan.

While working during retirement offers certain benefits: social interaction, structure, intellectual fulfillment, and/or creative fulfillment, it’s unlikely that you’ll receive the level of pay and benefits you commanded when you were employed full-time. Before you decide to continue working, consider what it would be like to go back to work, and explore alternative options for creating reliable income.

Put your health first—you can’t work forever

One in three workers (33%) expect to retire at age 70 or older, or not at all, according to a 2023 EBRI/Greenwald Research Retirement Confidence Survey ¹ In reality, however, 46% of workers retire sooner than planned, and for 35% of them, it’s because of a health-related problem or disability. Work that seems easy to you now could become more difficult as you age. This is particularly true if your job requires a certain level of physical strength or stamina. When you think about it, working after retirement goes against one of the main reasons retirement exists—working is more difficult when you’re older. If you have health problems, it may be difficult to do a job properly. 

If you’re going to earn less, work less

When you reach the later years of your career, it can be challenging to match the employee benefits and salary level of your mid-career years. Many employers consider candidates in their sixties too old to hire—even those who have not reached their official retirement age. Working after retirement needs to be done in a way that balances your time with necessary income. Perhaps, if you have the skills and professional connections, you can set up shop and work as a consultant. Or you can start your own small business. But if retirement work takes up all your time and doesn’t provide enough money to live on, you need to find another income solution (like taking in a roommate).

Put another source of income in place

One way to prepare for this before you’re retired is with a deferred income annuity. You’ll make contributions to it while you’re working, and the contributions will grow, either at a fixed rate or at a variable rate that depends on the performance of investments within the annuity. (Variable annuities can potentially generate greater growth, but there is also a risk of losses if markets fall.) When you retire, you can annuitize the savings, which will give you a guaranteed stream of income for the rest of your life. If you put money into your annuity over time during your career years, you can enjoy the benefits of deferred income later. The more you have put into the annuity, the higher your payments will be when you annuitize those savings after you retire.²

Seek advice

If you haven’t saved enough for retirement and are worried that going back to work might be necessary to support your lifestyle and financial obligations, connect with a financial professional to learn more about the retirement solutions that are right for you and that will provide you with the peace of mind that comes from knowing that your basic expenses can be met for the rest of your life, no matter what.

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