The Great Retirement Question: Should I Work During Retirement? | Financial Advisor Blog

The Great Retirement Question: Should I Work During Retirement? | Financial Advisor Blog

May 04, 2023

Traditionally, retirement was the state or period of cessation from work, usually after reaching a predetermined age, sometimes with pension benefits. It's a moment we're conditioned to look forward to our entire lives. Finally, free from the 9 to 5 grind, we have an opportunity to explore new hobbies, spend time with our families, and travel the world. However, there's been an increasing trend with baby boomers continuing to work even after retirement. Today, we're discussing the great retirement question "Should I work during retirement?"

It's essential to understand that every individual has different personalities, interests, and financial obligations, which significantly affect their retirement plan. There's a long-standing belief that once you retire, you never go back to work- an outdated myth. For some retirees, working offers the necessary financial stability, healthcare benefits, and intellectual stimulation. With retirees living longer and the uncertainty of the sustainability of social security benefits, continuing to work after retirement offers an opportunity to earn money, pay off debts and reduce financial stress.

Working during retirement also provides critical health benefits. The American Psychological Association suggests that meaningful work can counter feelings of isolation, promote self-worth and improve mental health. Working offers intellectual stimulation, challenging cognitive areas to promote mental wellness. According to a study by AgeWave and Merrill Lynch, nearly 7 out of 10 retirees indicated that work provides a sense of purpose and identity in their lives, important factors in well-being and happiness.

Moreover, for some retirees, the decision to continue working is not financially driven, but rather it's for the love of the work itself. Whether it's an entrepreneur starting a new business, a teacher who loves to teach, or an artist who loves to create, the opportunity to continue to practice one's craft can be fulfilling and positively impact mental health and overall well-being. It offers the opportunity to remain engaged in a community, share skills and expertise, and continue to give back.

However, it's crucial to note that working during retirement can have downfalls. It can be draining and negatively affect physical and mental health if working hours or tasks are too demanding. Additionally, it can interfere with family time and time for other activities like travel or hobbies. There's also the fact that if you continue working during retirement can impact pension benefits, and retirees should be careful not to accidentally surpass the earning limits that may apply.

So the question must be asked, if you remain working in retirement, are you really retired? At Summit, we make a distinction by calling working in retirement your "work-optional" phase of life. Work can be far less stressful if you are doing it for "fun" rather than to provide for yourself financially. It gives you the opportunity to work fewer hours, do something you really enjoy, and not worry about bringing home a fat paycheck or climbing the corporate ladder. 

Whether you choose to work or not to work during retirement, it's critical to understand that the decision is personal, and there is no right or wrong answer. Retirees should consider their financial needs, personal interests, and mental and physical wellness when deciding on a retirement plan. Working during retirement can be a fun, fulfilling way to earn extra income, stay mentally and physically fit, and contribute to society, but it has its limitations also. It's essential to weigh the pros and cons carefully and find a balance that works for you.