20% of Retirees Are Already Back to Work. What Is Driving This “Unretirement”?

Retirement, once synonymous with relaxation and leisure, has profoundly transformed in recent years. In this rapidly changing landscape, where financial stability and personal fulfillment often intertwine, an increasing number of retirees find themselves re-entering the workforce. 

Why Are Retirees Choosing To Work

Based on a recent report from T. Rowe Price, approximately 20% of retirees are already working either part-time or full-time work, while 7% are actively seeking employment during retirement.

Retirees are increasingly choosing to return to work for various reasons. Financial considerations play a significant role, with 48% needing to work for economic reasons. Many retirees find that their assets and pensions may not adequately support their desired lifestyle, leading them to seek additional income through part-time or full-time employment.

According to the report, only 37% of retirees with household assets under $50,000 said they don’t need to work, compared to 55% of individuals within the $50,000-to-$250,000 category and 72% with assets above $750,000.

With inflation hitting a 40-year record high and the volatility in the stock and bond markets, retirees are worried about their nest egg funding their lifestyle no matter what the retirement calculators say. 

Doug Amis, CFP, says, “Retirees watching prices increase at the grocery store have decided to go back to work.”

Beyond financial motives, retirees often discover that work offers a renewed sense of purpose and engagement, combating the potential boredom or restlessness that can accompany retirement. Social interaction in the workplace, as well as the opportunity to share their wealth of experience and knowledge, is another powerful motivator. 45% of retirees choose to work for social and emotional benefits instead of obsessing over when they can retire. 

Amar Shah, CFA, CPA, says, “Many of our business owners and corporate executive clients have a hard time with the traditional definition of retirement. Often, they return to some form of structured work by turning a hobby into a business, becoming an industry consultant/board member, or they take on a more meaningful role at a nonprofit. Through their working years, the business value or stock options have created significant wealth, sometimes $10M+, and many benefits of returning to work are beyond financial. These benefits include having a structure to their day, critical thinking/decision-making, social interactions, and knowing they are making an impact by doing something they enjoy. As advisors to these individuals, we also noticed that they seem happier overall.”  

Additionally, pursuing a long-neglected passion or embarking on a new career path can be a source of great personal fulfillment. The flexibility and adaptability of the modern workforce, which includes remote work and freelance opportunities, further make re-entering the job market an attractive option for retirees seeking a work-life balance tailored to their needs.

Employers Are More Flexible

Retirees bring valuable skills and experience to the workforce, making them an asset employers increasingly recognize and appreciate. 

Employers who hire retirees often find their decades of professional commitment and strong work ethic to be invaluable assets. They appreciate the wealth of knowledge and leadership qualities that older workers bring. Companies are increasingly embracing age-diverse teams and implementing flexible work arrangements to accommodate retirees, fostering a harmonious and productive work environment.

Riley Adams, CPA, was looking to hire experienced professionals at his firm Young and The Invested. He says, “Since we are a newer company, having the skill set and knowledge of experienced individuals on-demand is invaluable. We also prefer having experienced retirees willing to work for us under a freelancing arrangement. That means we don’t have to commit fully to a full-time employee at the startup phase. Still, we can also strategically leverage that experience as we need it. Plus, we feel retirees don’t want a full-time job but want to remain engaged with stimulating work part-time. As a result, it’s a perfect match for both parties.”

Challenges Faced by Retirees Joining the Workforce

Retirees venturing back into the job market encounter a unique set of challenges. One prominent hurdle is age discrimination, with employers occasionally harboring unfounded concerns about older workers’ ability to adapt and learn. Additionally, skill gaps may emerge due to evolving industry requirements, necessitating retirees to stay updated with new technologies and trends. The fast-paced nature of technology adoption can be intimidating, but older employees can overcome this by embracing lifelong learning. 

Returning to work during retirement can impact retirees’ lifestyles in various ways. While work can provide financial stability, it may alter how retirees engage in leisure activities. Pursuing hobbies and personal interests may take a back seat to work commitments.

Retirees may also need to prepare for the stressful situations of full-time work, resulting in potential burnout. Opting for low-stress jobs can provide a balanced retirement experience that integrates the best of both worlds.

Financial Considerations for Retirees

The financial aspect of retirees returning to work carries both opportunities and considerations. Working in retirement can provide additional income to bolster savings with continued contributions to retirement accounts such as 401(k), HSA, and IRA, potentially increasing the average net worth. 

However, it may require careful navigation of Social Security benefits. If you claimed Social Security early before full retirement age, benefits could be temporarily reduced based on earnings. Apart from the added income potentially pushing you into a higher tax bracket, it can also lead to additional costs for Medicare.

This underscores the importance of strategic timing to maximize these benefits. The key lies in aligning work choices with overall financial goals to ensure retirees can enjoy a secure and fulfilling retirement while thriving in the workforce.

Future Outlook for Unretirement

The presence of retirees in the workforce has a significant positive impact on the broader community and society. Their wealth of experience and knowledge contributes to intergenerational knowledge transfer, helping younger employees learn from their expertise. Moreover, retirees often serve as mentors and role models, fostering a culture of learning and development within organizations. 

As the concept of retirement transforms, we can anticipate several key trends, such as extended retirement ages, flexible work arrangements, including remote work and part-time roles, the need for upskilling and lifelong learning, and more jobs suitable for retirees.