Unretired?
Retirement isn't sticking for some baby boomers, but those who re-enter the workforce after spending years on a fixed income could face some unexpected—and expensive—consequences.
Many older Americans are deciding to go back to work. In 2023, more than 13% of baby boomers left retirement to rejoin the labor pool, marking a 24% increase from the previous year. This "unretirement" trend is driven by various factors. While some seek to supplement their income, others return to work to maintain a sense of purpose and stay socially connected.
Returning to the workforce offers several benefits. It helps older adults stay socially engaged, which is crucial for overall well-being. Physical health can also improve by staying active instead of remaining sedentary. Loneliness, a significant risk during retirement, can lead to physical, emotional, and cognitive decline, but rejoining the workforce can mitigate these risks.
However, unretirement comes with financial implications that must be carefully considered:
Taxes
Additional income from employment can lead to higher tax liabilities. Retirees must be aware of how their new income bracket affects their overall tax situation.
Social Security
Retirees already receiving Social Security benefits may experience a temporary reduction in these benefits due to increased earnings. This could impact their financial stability in the short term.
Healthcare
Increased income might result in higher Medicare Part B premiums. In 2024, the standard premium is $174.40 per month, but those earning over $103,000 individually, or $206,000 jointly, will face income-related adjustments. These adjustments can raise premiums significantly, with the highest earners paying up to $419.30 per month.
Living Expenses
Returning to work often entails additional costs, such as commuting, buying meals, or updating wardrobes. These expenses can add up and should be factored into the decision to unretire.
Despite these challenges, many unretirees find a renewed sense of purpose in their jobs. Staying in the workforce or engaging in volunteer activities can provide significant benefits, including a sense of purpose, social interaction, and mental and physical stimulation. For some, the additional income is a welcome bonus.
At Truesdell Wealth and The Truesdell Companies, we understand the complexities and nuances of unretirement. With our experience spanning five decades and thousands of clients, we are well-equipped to guide you through this transition. Scheduling a consultation with us can help you navigate the financial and personal implications of returning to work, ensuring that you make informed decisions tailored to your unique situation. Our expertise can help you balance the benefits and challenges of unretirement, allowing you to enjoy a fulfilling and financially secure post-retirement life.
