When you’re planning and dreaming of your future retirement, you don’t often think about what it’s like to unretire once you get there. For some people, retirement can be a bit hard to get used to—especially if they loved their career. And for others, the rise in cost of living, inflation, and other financial factors may determine whether or not they’re thinking about coming out of retirement.
Why Retirees Are Coming Out Of Retirement
According to a survey by Resume Builder, one out of every five retirees is going to return to work this year.1 In fact, 69% of retirees are planning on coming out of retirement for financial reasons, and almost 24% of retirees would go back to work out of boredom.2,3 After years of raising a family and working towards a rewarding career for so long, it can be hard to get used to the slower pace of life that retirement offers.
What to Consider Before Unretiring
If you’re considering coming out of retirement, there are a few things you’ll want to think about. Coming out of retirement has more of an impact on your retirement benefits than you might think. Here’s what you should know:
1. Social Security Benefits
If you started working within a year of retirement (and you haven’t hit full retirement age), you may have to repay any social security benefits you’ve received. Not only that, depending on your retirement age when you unretire, the Social Security Administration (SSA) will deduct money from what you earn above the annual income limit. To find out exactly how the deductions work, visit their website. Lastly, increasing your income could mean an increase in taxes on your social security benefits. Visit the SSA website to learn more.
2. 401(k) Contributions
One of the benefits of working is the opportunity to contribute to a retirement account like a 401(k). If the company you’re going to be working for provides retirement benefits, you might be able to delay your required minimum distribution (RMD) while you’re working. This will only serve to provide even more financial stability for your future as you build on what you already have.
3. Increased Medicare premiums
Depending on how much you earn from working after retirement, your Medicare plan could be affected. If you have Medicare Plan B and make over $97,000, your monthly premium will increase.4 Visit the Medicare Plan website to learn more about how your coverage will change.
Coming out of retirement isn’t just about finances, it’s also about your emotional health. If retirement was harder than you thought it would be, that’s okay! Unretiring doesn’t have to mean going back into another full-time job. It can be about providing value in a way that you couldn’t in previous seasons of your life.
Maybe you’re passionate about a specific charity or cause. Or maybe you want to spend more time impacting your community by working at the local food bank or homeless shelter. No matter what coming out of retirement looks like for you, a financial advisor can help. Contact your SageSpring Wealth Advisor today and we can help make sure your retirement is as financially healthy as possible.
