There are good arguments for both sides.
Retirement means saying goodbye to your 9-to-5 job, but it doesn’t always mean leaving the workforce for good. Some people actually prefer to work at least part-time in retirement, though this isn’t for everyone.
If you’re on the fence about it, this list of pros and cons might help you decide.
Pros of working in retirement
Working in retirement has several key benefits.
1. Extra income
The most obvious perk of a retirement job is that you’ll have some extra money coming in every month. This can be a lifesaver for those who weren’t able to save as much as they wanted when they were younger. You can use your income from your job to cover some of your expenses so you don’t need to withdraw your retirement savings as quickly.
You don’t have to work a full-time job if you don’t want to, and you don’t even have to stay in the industry you’ve always worked in. Look for something that’s more in line with your interests and provides a reasonable salary for the work involved.
2. Higher Social Security benefit
The Social Security Administration bases your benefit on your average monthly income during your 35 highest-earning years, adjusted for inflation. Working fewer than 35 years shrinks your benefit because you’ll have zero-income years factored in. And working longer than 35 years often increases your checks.
That’s because most people earn more money later on in their careers than they did when they were just starting out. So their more recent, higher-earning years gradually replace their earlier, lower-earning years in their benefit calculation, resulting in larger Social Security checks.
3. Socialization and purpose
Working gives you a chance to socialize with others, and it can help you feel like you’re contributing to your community in a meaningful way. Of course, work isn’t the only thing that can give you this sense of accomplishment, but it’s an option worth considering.
Cons of working in retirement
Despite the above benefits, there are a few reasons you may not want to work in retirement.
1. More taxes
Working in retirement could raise your taxable income for the year, forcing you to give more to the government than you expected. But this is something you can plan for in advance. And, if you have substantial Roth savings, you may not notice much of a difference. Retirement withdrawals from these accounts won’t count toward your taxable income at all.
You could also face Social Security benefit taxes. Again, you might be able to avoid these by planning your withdrawals strategically. But if that’s not possible, the next-best thing to do is plan for them in advance based on your estimates of your annual taxable income.
2. Less free time
Obviously, working takes away time you could be spending with family and friends or pursuing your favorite hobbies. This is a serious negative for some people, but if you only work part-time, it may not be too bad. Looking for a job that aligns with your interests may also help make this easier.
Only you can decide whether working in retirement is a good fit for you. But if you decide you want to, don’t let that stop you from stashing away as much as you can for your future right now. You never know what will happen between now and retirement. Something might come up that makes it difficult or impossible for you to work as long as you’d originally planned. So it’s always best to err on the side of caution.
