Why So Many Retirees Are Returning To Work Even After Saving for Decades
Many workers believe that if they just save diligently, they can leave the workforce behind and finally enjoy more freedom in retirement. Yet a growing number of retirees are finding themselves back on the job, whether through part-time work, consulting gigs or entirely new careers. What's driving this shift?
Finance experts who work with retirees offered up some explanations.
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Retirement Is Becoming a Transition, Not a Finish Line
Retirees are returning to work for a variety of reasons, not just financial hardship, according to Christopher Stroup, certified financial planner (CFP) and owner of Silicon Beach Financial.
"Longer life expectancies, rising costs and shifting expectations around lifestyle mean many retirees want additional income or flexibility," he said.
While retirement used to be viewed as a destination, it's becoming more of an evolving phase of life. One that Ashley Akin, a certified public accountant (CPA) and senior contributor at TMGM described as “a transitional process rather than a singular event."
Healthcare Costs and Inflation Are Stretching Savings Thin
Two of the biggest culprits pressuring retirees financially are healthcare costs and broad inflation — expenses that many retirement plans underestimate or fail to account for entirely.
"Many people focus on everyday retirement spending but underestimate healthcare costs that emerge later in life,” Stroup said.
He explained that long-term care, prescription expenses and out-of-pocket medical costs “can create major financial strain if they aren't incorporated into the planning process early."
Stroup also pointed to overall inflation as creating “significant pressure” on the categories that “retirees rely on most."
A retirement plan built around assumptions from 10 or 15 years ago may need meaningful adjustments to maintain the same lifestyle.
Karen Southall Watts, a job coach and instructor for the Employability Lab at Alamance Community College, said that the current inflation situation “has literally reduced clients I know to tears."
Family Obligations Are Creating New Retirement Pressures
Many retirees are also shouldering financial responsibilities that extend well beyond their own households. Earlier generations rarely had to plan for these costs.
For example, some retirees are helping adult children with housing costs, education or childcare while also caring for aging parents.
“These multigenerational financial responsibilities can place unexpected pressure on savings and long-term retirement goals," Stroup said.
The economic situation isn’t helping, either, Watts said: "As the economy continues to tank, retirees … are increasingly being asked to contribute to extended family through free labor or infusions of money."
Working Longer Can Protect Retirement Portfolios
For some retirees, Stroup said that returning to work can reduce the need to withdraw money from retirement accounts during volatile markets.
It can also create “breathing room and reduce pressure on investment portfolios during retirement … which gives retirees more stability,” Akin added.
Not Every Retiree Returns To Work for the Same Reason
The decision to return to work is rarely one-dimensional. For some, it is a financial necessity; for others, it is a lifestyle choice.
Stroup said that while some retirees return to work because they need additional cash flow, "others want greater flexibility for travel, family support or unexpected expenses."
Watts pointed to several potential benefits of returning to work: a sense of purpose, social connection and keeping the mind sharp.
However, Watts also noted that there is a huge difference between “continuing to work because you want to and working because you won't survive without a job."
A Changing Retirement Landscape
The retirees returning to work today aren't necessarily people who failed to plan. In many cases, they're navigating longer retirements, higher costs and financial realities that previous generations never faced.
If you are approaching retirement or already retired and feeling financial strain, you are not alone. The core advice from professionals is to build healthcare costs and inflation into your retirement projections early, and recognize that a flexible, phased retirement may serve you better than a hard stop.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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