Retirees Are Returning To Work — Here’s the Big Reason Why
Written by
Gabriel Vito
Edited by
Zuri Anderson
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Retirement is no longer a clean exit for many Americans. In 2024, about 19.5% of people age 65 and older were in the labor force, according to the U.S. Bureau of Labor Statistics, up from about 12.9% in 2000.
The timing matters. Millions of Americans are entering retirement while living costs remain high, life expectancy continues to rise, and fixed incomes feel less forgiving than they once did. For many households, fully stepping away from work no longer feels guaranteed.
Also find out ways to earn income in retirement — without a side gig.
Why More Retirees Are Working Again
For a growing share of retirees, returning to paid work is not about going backward. It is about keeping finances from tightening year after year.
Jay Zigmont, PhD, certified financial planner (CFP®) and founder of Childfree Trust®, describes two broad groups: Retirees who return to work because they need the income and those who do so with more flexibility. In practice, the pressure behind both often looks similar.
“A growing number of retirees are returning to work in order to make ends meet. Retirees are on a fixed income, yet all expenses are going up,” Zigmont said. “In some cases, the rising cost of Medicare is more than the effective COLA. The result is that any gain in Social Security is eaten up by Medicare, well before normal bills are paid.”
While Social Security benefits do receive annual cost-of-living adjustments (COLA), those increases are based on inflation that has already occurred, not current prices. For 2025, the COLA was 2.5%, according to the Social Security Administration.
That structure helps explain why retirees can feel squeezed even when benefits rise. Costs often move first. Adjustments arrive later.
Health Care Costs Are a Major Factor
Health care remains one of the largest and least predictable expenses in retirement. According to Fidelity Investments‘ 2025 Retiree Health Care Cost Estimate, a 65-year-old retiring this year can expect to spend about $172,500 on health care and medical expenses over retirement, not including long-term care.
For many retirees, income is more about protecting savings. Even a modest paycheck can help cover insurance, prescriptions or everyday expenses without forcing larger withdrawals during uncertain market years.
What Returning to Work Actually Looks Like
For many retirees, returning to work does not always mean going back full-time. It often means part-time or flexible roles that help supplement income without fully reentering the workforce.
Bureau of Labor Statistics data shows that about 38% of employed workers age 65 and older worked part-time in 2024, emphasizing how common that shift has become.
Some Retirees Return to Work by Choice
Not every retiree who returns to work does so out of financial strain. For some, the appeal is structure, flexibility or staying engaged.
Jonathan Vance, CFP® and IRS Enrolled Agent at Vance Financial Planning, said this often happens when former employers offer consulting or part-time roles.
“In my experience, the decision to return to work is often driven by personal fulfillment rather than financial necessity,” Vance said. “They’re often easy to accept due to increased flexibility while maintaining a stream of earned income, which adds additional comfort in early retirement.”
The difference today is that fulfillment and financial security are no longer separate conversations. For many retirees, they overlap.
What This Shift Means for Retirement Today
Taken together, the data and expert insight point to a clear shift. Retirement is less likely to be a firm stopping point and more likely to be a period where people reassess income, expenses and risk as costs, health and markets change.
For households planning ahead, the takeaway is not that retirement is disappearing. It is that flexibility is becoming part of financial stability. Working longer, returning part-time or consulting after retirement is increasingly a way to manage risk, not a sign that something failed.
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