When Is It Time to Go Back to Work?

Retirement may be the time of life that we actually plan to be unemployed, but the stars are not always aligned with our goals. Sometimes, we have to take on temporary work during our golden years.

If you aren’t sure whether you should take on a job after you retire, here are five situations that indicate you probably should.

1. You can’t make your budget work. Hopefully, before you retired, you adjusted your postretirement budget to something that your savings could support for a number of years. But if you find that the new budget you have is just too small to be feasible, you might decide to supplement it with additional income from working.

2. You’re scared. The future has always, to some extent, been a big unknown. When you’re retired with a limited pool of funds to support you, it can feel like an even bigger, more ominous unknown. This fear—whether well founded or not—can really impact the quality of your retirement years. If working a part-time job would alleviate some of that stress and fear, it’s probably a good move.

3. You have an emergency that’s going to cost you. When an unexpected emergency expense pops up, you might not be able to pay for it out of your retirement savings. Or you may, but might feel better if you didn’t have to. A part-time or temporary job can take the sting out of the unexpected.

4. You want something. There are some expenses and treats that are totally reasonable on a postretirement budget, and there are some that aren’t. If you long for a new vehicle, a grand vacation, a new appliance or some other big-ticket item that your budget doesn’t permit, you can always increase your income by going to work temporarily. This could allow you to make the purchase you want without taking a chunk out of your retirement savings.

5. You lose money. Hopefully, either you, or your advisor, have refocused your investment strategy on preservation of savings rather than accumulation through investing. But if you haven’t refocused, or have a small amount in investments such as stocks, and you experience a loss in the value of your portfolio, you may want to take on a job to help reduce the impact of that loss on your overall savings.

6. You’re bored. Not every decision to work after retirement has to be about financial need. Sometimes retirees just miss working. They miss the purpose a job gives, the companionship and the challenge. Part-time or full-time employment can really pull a retiree out of the doldrums.

When taking on postretirement work, consider going through a temporary agency. This will give you some flexibility and cut down on the time you must spend applying for positions and going to interviews. You can also look for seasonal work so that you know you won’t leave the company in the lurch when you no longer want to have the position. Remember too that not every job you take on must be full time. Working part time offers a viable financial solution for many seniors. You could even consider becoming a contractor and doing odd jobs for others in exchange for payment rather than going a more traditional route. Finally, when considering what job to apply for, find out about the possibility of employee discounts on the services or products sold by the hiring company. These can add extra padding to your overall budget by reducing your expenses, making the choice of employer a strategic move.

It’s not just important to consider financial need when determining whether you should get a job, but also what you’re going to do with the money. If you have a traditional IRA, you can’t make contributions to it when you reach the age of 70.5. In addition, you will be forced to take an RMD and you will receive Social Security payments—all of these things combined with a taxable employment income could push you into a higher tax bracket, leaving you less money than you thought you’d have after working.