Is 'Unretiring' Right for You? How to Decide on Returning to Work After Retirement

Fact checked by Vikki Velasquez

Retired and thinking about going back to work? You won’t be alone.

About 20% of retirees have full-time or part-time jobs, according to T. Rowe Price’s 2022 Retirement Saving & Spending Study. Another 7% of those surveyed are seeking jobs.

Here are the things to consider before you unretire and head back into the workforce.

Key Takeaways

• To make being unretired work for you, first, go through your finances. Is there a certain amount of money you are looking to make from your new job?
• Taking up work can impact your taxes, Social Security benefits, and Medicare premiums.
• Choose a job that you will enjoy. It may be something new, or you may find yourself consulting in your old line of business.

Reasons for Returning to Work

First, examine why you want to unretire. Knowing why you want to go back to work can help you plot the best direction for the next phase of your career.

“Start with why you’re considering going back. Is it boredom, a sense of purpose, income need, or a mix of all three? That answer should guide the rest of the conversation,” said Melissa Caro, a certified financial planner and founder of My Retirement Network.

Missing the interaction at work may draw some retirees back to the workforce.

“The initial relief of leaving the workforce often gives way to missing the structure, identity, or daily interaction that work provided,” Caro says.

Financial pressures and worries drive other retirees to rejoin the workforce.

“There’s also a financial reality check that hits some retirees later. Inflation, market volatility, and unexpected healthcare costs can create anxiety even for those who thought they were set,” Caro said.

The Financial Impact of Unretiring

Think about how returning to work will impact your Social Security benefits, Medicare, and taxes.

With Social Security, if you’re under full retirement age, earning too much with a new job could reduce your benefits temporarily—though you'll be credited the withheld benefits later. If you decide to return to work after full retirement age, there’s no earnings cap to worry about, but your benefits may still be taxable, according to Caro.

Going back to work may also impact your Medicare premiums. “Medicare premiums are based on a two-year look back from your tax returns, so it is possible that the client gets bumped into a higher premium bracket for Medicare in two years,” said Brandon Angotti, senior wealth financial planning manager at Union Savings Bank.

Plus, working means getting paychecks again, and you’ll need to pay federal and state taxes on the income you make from your new job.

Here are some tips for coming back into the workforce after you’ve retired:

• Embrace new opportunities. “Treat it as a new chapter, not a rerun of your old career. Look at part-time roles, consulting gigs, or something completely different that aligns with your current lifestyle,” Caro says.
• Look at your finances. Does going back to work make sense financially? Crunch the numbers to find out. “Run the numbers—don’t just chase a narrative. A simple forecast can reveal whether going back to work is solving a problem or creating new ones,” Caro said.
• Don’t rush into anything. Start small as you consider your career choices. “To ease the transition, try volunteer roles or project-based work before locking yourself into a full-time commitment,” Caro said.

The Bottom Line

Retiring can be great, but if you miss the social interaction or challenge of working or you need the money, you may wish to 'unretire' and head back to the workforce. Take a close look at your finances and determine how much money you are looking to make with a new job. If you're not sure what type of job you would like, you may start with volunteering or part-time work. Step into a familiar field or try something new. It is all up to you.

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