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Consider this scenario: You’ve been working hard all your life so you can one day enjoy a comfortable retirement. Finally, retirement arrives. You spend a year taking cruises and visiting family and friends, just like you always imagined you would. That leads you to desire one thing: to unretire!

If you find this scenario surprising, you shouldn’t. “Unretiring” is quite common. An F&G Annuities & Life survey last year found that 50% of those aged 60 to 69 are either considering returning to work or already have returned to work. The reasons are many times not financial. A recent T. Rowe Price survey found that 45% of retirees are returning to work for the social and emotional benefits.

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What unretiring looks like��

“I have had a number of clients who retire and then return to work because they missed the social interaction and intellectual stimulation, which is perfectly natural,” says planner Ann Crehan, Executive Director, Financial Planning. “For them, it’s an opportunity to work part time in something they simply enjoy doing,” Crehan says, adding she has had clients who decided to work at their golf clubs because of their passion for golf.

"It’s not uncommon for clients to find continued opportunities in their existing profession in the form of consulting, mentoring or project work," O’Bannon says. 

Of course, volunteering can provide social interaction and mental stimulation as well, but “some people are seeking a specific sense of purpose they get from having a job, especially if it’s in a field they love,” says planner Jeffrey Whitmer, Director, Financial Planning. Moreover, a part-time job shortly after leaving a multidecade career also can be a good way to transition into an eventual full retirement.

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The opportunities and impacts

If you’re thinking of unretiring, the post-pandemic employment landscape offers more flexible and remote work opportunities. These jobs may allow you to work more on your own terms while maintaining a “retired” lifestyle. Companies may be open to hiring more retirees amid a historically tight labor market and studies showing the benefits of hiring retired workers, such as proven skill sets. AARP’s job database is one place to seek jobs that cater to those thinking of unretiring.

Yet, deciding to work even part time during retirement when you didn’t plan on it can have financial impacts that you need to consider. For this reason, this decision should be made in partnership with your financial planner. To get you started, let’s take a high-level look at how unretiring could impact your Social Security benefits, taxes and health care insurance.

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Social Security

• If you start earning income again, your Social Security benefit may be impacted, depending on whether you’re above or below full retirement age.
• FRA is 66 for those born between 1943-1959. Between 1955-1960, the FRA phases up to 67, where it remains for those born in 1960 and after.
• If you’re under FRA for the entire year of earning income, the SSA deducts $1 from your benefits for every $2 you earn above an annual income limit ($22,320 in 2024).
• In the year you reach FRA, the SSA deducts $1 in benefits for every $3 you earn above a higher income limit ($59,520 in 2024), until the month you reach FRA.
• NOTE: Your benefit will then increase at your FRA to account for benefits withheld due to earlier earnings.
• If you haven’t started taking the benefit, working part time for a number of years could end up increasing your benefit. This is in addition to the 8% annual benefit increase you receive each year that you wait beyond FRA up until you’re 70.

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Taxes on Social Security and portfolio withdrawals

• If you have already started taking Social Security, having a part-time job could result in material taxes to your Social Security benefits.
• The tax is based on your combined income, which is equal to your Adjusted Gross Income, plus any nontaxable interest and half of your Social Security benefit.
• For example, if you file as an individual and your combined annual income is between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits.
• If it’s more than $34,000, then you may have to pay income taxes on up to 85% of your benefits. The combined income ranges are higher when filing jointly with your spouse.
• Income from a part-time job could decrease your portfolio withdrawal rate, but it could also bump you into a higher income tax bracket. This could impact 401(k) withdrawals, which are taxed as ordinary income.
• Consult with a tax professional to better understand the tax impact that a part-time job could have.

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Health care

• If you’re below the Medicare eligibility age of 65, you may be using the government’s Health Insurance Marketplace to buy health care insurance. You may be paying lower premiums thanks to subsidies for those with lower or no income, so a part-time job could impact your subsidy.
• If you’re already receiving Medicare, and you end up receiving health care insurance through your new employer, you can use Medicare as your secondary coverage.
• Medicare B premiums are based on income brackets, so consult with your planner to determine whether the additional income from a part-time job would put you in a bracket that results in a higher premium.

These are just a few potential financial impacts to weigh against the benefits that unretiring could offer. If you’re considering unretiring, don’t hesitate to contact your financial planner.

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