Is Returning to Work in Retirement a Good Idea?

Two businesswomen discussing, mid adult woman with long blonde hair smiling and listening to female manager with short grey hair.

The so-called working retirement is becoming more and more popular. 

According to AARP, adults 65 and over are twice as likely to be working today as they were in 1985, which is just one sign of the growth of work in retirement.

First, some data: 

  • As of February 2019, more than 20% of adults over age 65 are either working or looking for work, compared with 10% in 1985. 
  • The U.S. Census Bureau and the Bureau of Labor Statistics expect this trend to continue, estimating that 13 million Americans 65 and older will be in the labor force by 2024.
  • But those that can pull this off are typically more educated, with the share of those working in retirement with at least a college degree growing from 25% in 1985 to 53% today.

Quote: “The healthier, better-educated and higher-earning, white-collar people can work longer. There is a mismatch. Those who are working longer need the money less.” — Elizabeth Kelly, senior vice president of operations at United Income

So, that’s the landscape we’re looking at. Working retirement is becoming more and more popular, but is it a good idea?

Financial Considerations First: There’s certainly nothing wrong with wanting to continue working after retirement, either for some extra income or to keep yourself busy. But it’s important to consider how that extra cash might impact the rest of your finances, particularly your Social Security benefits, before taking the leap. Consider a financial planner that can help with financial planning for retirement.

Here are a few areas to think about:

Social Security: The Social Security Administration is very straightforward when it comes to the impact that working in retirement can have on your benefits. I kid. It couldn’t be more complicated. Here’s the main thing to know: If you started taking Social Security before reaching your full retirement age and return to work your income could reduce your benefits. The cap on how much you can earn before dinging your benefits as of 2021 is $18,960. When you start working, your benefits are reduced $1 for every $2 you earn over that threshold.

Medicare: With Medicare, it’s simple: higher earners pay a higher surcharge for Medicare Part B and part D, starting at an income level of $88,000.

Required Minimum Distributions: When you’re contributing to your retirement account during your working years, you enjoy tax benefits on the expectation that you’ll pay taxes on that money when you take it out later. That’s why the government requires you to take out a certain amount every year in retirement at age 72 to start paying that back. Even if you’re working, those requirements don’t go away.


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