Regret Retiring? 4 Things To Consider Before You Go Back To Work
Written by
John Csiszar
Edited by
Zuri Anderson
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While retirement is supposedly a time when seniors hang up their work boots once and for all, a surprising number of older Americans actually end up working.
In fact, according to the 8th annual T. Rowe Price Retirement Saving & Spending Survey, roughly 20% of retirees are working either full-time or part-time. While some retirees are unfortunately forced back into the workplace to make ends meet, about 45% work for social and emotional benefits instead, according to the survey.
If you’re considering going back to work for these reasons, it’s important to understand that you may trigger some financial ramifications.
Here are some of the factors that you should consider before you decide to return to the workforce.
You Might Struggle To Get Hired for a Job You Enjoy
When you look for a job as a senior, you might find the market to be quite different than it was when you were in your 20s and 30s. While no employer is allowed to discriminate solely on age, many are reluctant to hire older workers for various financial reasons.
Older workers tend to ask for higher salaries, and they may have to be retrained to learn current technologies and processes — something which costs employers money. Insurance companies may also require higher premiums for older workers. Employers also tend to prefer workers who will stay with a company for a long time, and older workers may only be seeking part-time or short-term work.
There are certainly plenty of jobs available for older Americans, but you might have to look harder than if you were fresh out of college with a hot degree.
Your Social Security May Become Taxable
If you earn above certain limits, your Social Security can become taxable.
If you’re an individual earning between $25,000 and $34,000, up to 50% of your Social Security payout can be taxable. Above that amount, as much as 85% may be taxable. If you’re a joint filer, the brackets rise to $32,000 and $44,000, respectively.
Picking up even a part-time job after you retire may push you up into the taxable bracket, effectively diminishing your earnings. You’ll have to compare the loss of your Social Security income to taxes versus the increased earnings you’re receiving from your job.
The Social Security Administration May Reduce Your Social Security Payments If You Retire Early
If you retire at or after your “full retirement age,” which is currently 67 for those born in 1960 or later, you will always receive your full payout. However, if you choose to retire early, the Social Security Administration (SSA) will reduce the amount they pay you if you earn above a certain amount.
Specifically, for 2024, the SSA will reduce your benefit by $1 for every $2 you earn above $22,320. In the year you reach full retirement age, that reduction drops to $1 for every $3 you earn above a different limit — $59,520 for 2024.
This can result in a significant reduction to your monthly income, so you’ll need to factor that in if you decide to retire early and then go back to work.
However, it’s important to note that this isn’t a confiscation of your benefits. Rather, it’s simply a deferral. Once you reach full retirement age, the SSA will make an adjustment to your full retirement benefit and add back in the money it withheld.
It’s also possible that your full retirement benefit itself may actually increase, based on how much you earn at your job.
Medicare May Cost You More
While Medicare Part A (hospital insurance) is free for most Americans, Part B (medical insurance) carries a $174.70 monthly premium.
However, those with higher incomes pay more. The premium starts rising for individuals with a modified adjusted gross income of over $103,000, or joint filers with a modified adjusted gross income (MAGI) of at least $206,000.
The highest possible monthly premium is $594 for individual and joint filers with MAGIs of at least $500,000 or $750,000, respectively.
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