There are benefits to working after retirement, and not all about the money. Learn four non-financial reasons to keep working in retirement.

Working through retirement may seem like an absurdly oxymoronic approach to one’s golden years, yet it’s becoming the norm. 

A clear majority of Americans are weighing up doing “post-work work,” according to a recent survey from Nationwide Financial. Over two-thirds (69%) of unretired investors report they may work or continue working after retirement. In addition, nearly half (44%) say they have no choice – that they’ll need to do so to supplement their retirement income.

Uncertainty stemming from market volatility and rising inflation has forced many to revise their long-term outlook. According to the survey, many workers are considering post-retirement work and relocating to more affordable or tax-efficient parts of the country. The trend signals the ever-present need for prudent planning so individuals can remain financially secure and personally fulfilled to make the most of post-career years. This post will consider the drivers of this emerging trend and consider some expert advice on how to approach working in retirement. 

Rethinking Retirement

Retirement in the 21st century just ain’t what it used to be. The simple days of having time to golf, travel, and enjoy hobbies are fading. Retirement has now become more multifaceted as retirees try to manage tight budgets and balance competing aims. 

The rising cost of retirement is causing more retirees to return to the workforce. There are a host of drivers: from increased life expectancy (and rising healthcare costs) to the desire (or need) for additional income as well as the sense of meaning derived from work. Many retirees want to aim for something bigger than the little flag on the golf green – they want to undertake something fulfilling that keeps them mentally and socially engaged.

The tendency of older workers to stay in the workforce is a long-term trend that has been gaining pace since at least the turn of the century. From 2000 through 2015, the labor force participation rate for American men aged 65–69 rose from 30% to 37%, while for women, it rose from 19% to 28%.

“Advisors have to adjust to more retirees working part-time,” says Jonathan Bird, a financial advisor at Farnam Financial. “There is a significant difference in the quality of life and longevity between retirees who stay active and those who don’t. If starting a side business while in retirement makes you excited to get out of bed, then get after it!”

 What About Social Security?

It’s essential to factor in Social Security benefits when weighing up whether to work during retirement. Most retirees expect social security to fund 70%-80% of their pre-retirement earnings. This means they would need extra income to help supplement their lifestyle. Retirees need to expect Social Security to cover at least 40% of their expenses in retirement. However, with possible budget cuts to Social Security in the future, it could be more like 30%. 

Suppose someone retires and is still at full retirement age for social security. In that case, “their social security benefits could be negatively impacted by the amount of money they earn during retirement,” says Jon McCardle, AIF, President, Summit Financial Group of Indiana. 

A solid financial plan for social security and retirement funds is necessary at this age. You never know how much costs could go up and how much you may need.

Ignorant Bliss?

One may think those who’ve prepared for retirement will be less worried, but curiously, that’s not the case. 

According to the Nationwide Financial survey, 49% of non-retired investors who work with a financial advisor are “very nervous” about spending their retirement savings in the current market environment, compared to 32% of investors who do not work with one. This uncertainty may stem in part from the current economic climate. 

“Research suggests taking distributions from accounts during down or bear markets can significantly impact the principal and the retirees’ ability to avoid outliving their money,” says McCardle. He suggests delaying retirement a year or two to avoid damaging investments could be better. 

With market volatility, retirees could be nervous about the future. That brings on extra anxiety that brings them back to the workforce or delays retirement.

Working through retirement can bring mental stimulation and a sense of purpose. However, if it’s not handled properly, it can lead to burnout and decreased health. In weighing up what’s the right approach, it is important to keep in mind what is driving people to keep working.

Some workaholics may be unable to quit the habit of making (and saving) money, while others who are short on cash will just have to work to survive while their bodies are getting feeble. Ultimately, continuing to work should be a choice. Being financially secure before retirement gives people the freedom to work or not work as they see fit, ensuring a happy and fulfilling retirement experience.

Retirement is the goal of many a worker. Those just starting out in the workforce often dream of the day they will get to kick back, relax and just do nothing.

Here are four non-financial reasons to keep working after retirement.

1. Retirement Could Last a Long Time

When the Social Security Act was first passed, the average life expectancy was just a year past the agreed-upon retirement age. Those demographic realities may have been good for the financial solvency of the program, but they were definitely not good news for the retirees themselves.

In the intervening decades, things have changed a lot, and these days the average retiree can expect to spend 20 years or more of their life in retirement after their career has ended. That means your own retirement could last a very long time, and that is a lot of time to fill with golf outings and puttering around the house. In the end, working part-time in retirement could be the perfect way to fill those idle hours, even if you don’t need the extra money.

2. Working Can Offer a Sense of Fulfillment

Whether they enjoyed their careers or hated their jobs, many retirees find themselves bored and lonely. They miss the sense of fulfillment and commitment working provided, and they find that again in part-time work.

Working is more than a financial transaction – it is also a form of social interaction. The social and societal aspects of employment do not change upon retirement, and that is why so many retirees choose to return.

3. It Will Help Alleviate a Critical Shortage of Younger Workers

If it seems like the population is getting older, it’s not your imagination. Around the country and across the globe, average ages are increasing as a result of longer life spans, advances in medical care, and a declining birth rate.

Given those demographic realities, future careers are likely to be longer, and older people in the workforce will probably become even more commonplace. By working part-time in retirement, you can earn an extra income, but you will also be helping to alleviate what could soon be a critical shortage of qualified workers.

4. Your Life Experience Could Make You a Valuable Mentor

You learned a lot during your working years, and now it’s time to pass on those lessons to the next generation. High school and college classes can only go so far, and there is no substitute for real-world experience.

By taking on a part-time job in retirement, you get a chance to mentor younger workers, either in an informal capacity or through a formal mentorship program. The lessons you impart could have a profound impact on the skill level and earning capacity of the next generation, and you will have a direct role in providing that better future.

The Bottom Line

Dreaming of retirement is a common part of the workday for many employees. Those workers imagine their post-work lives, and they cannot wait to end their careers and start enjoying their golden years.

In the end, however, the reality of retirement is often quite different. Even well-off retirees may find that they miss the jobs they thought they hated, choosing to return to employment albeit in a more limited capacity. Whether you’re already retired or just dreaming of the day when choosing to work is optional, there are very good reasons to pursue work after retirement, and not all of them are about the money.

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Disclaimer: This article is intended for informational purposes only and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.