3 Things to Consider Before You Come Out of Retirement

The record inflation we’re facing has ramped up the financial pressures on everyone, including retirees. What once seemed like a comfortable nest egg might now seem like far too little, and rather than take the risk, many seniors are at least considering the possibility of returning to the workforce.

A steady paycheck is a significant motivator, but it’s not the only factor retirees need to think about before recommitting to a job. Here are three other things they need to weigh as well.

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1. Lifestyle changes

Perhaps the most obvious change returning to the workforce brings is a decrease in free time. This can be a difficult adjustment if you’ve grown used to spending your time however you choose. But if you really need money, it might be the lesser of two evils.

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If you decide to return to the workforce, try to come up with a plan for how long you’ll work until you retire again. Or consider going back part time instead of full time. One or both of these things might help you get comfortable with the idea of giving up your free time.

2. Effect on Social Security checks

Seniors who claim Social Security while working could lose some of their benefit if they’re under their full retirement age (FRA). That’s somewhere between 66 and 67 for today’s workers. The Social Security earnings test withholds some of your checks if you earn over a certain amount while under your FRA.

In 2022, you lose $1 from your Social Security checks for every $2 you earn over $19,560 if you’ll be under your FRA for the full year. If you’ll reach your FRA in 2022, you only lose $1 for every $3 you earn over $51,960 if you hit this amount before your birthday. The government will recalculate your benefit once you reach your FRA, and your checks going forward will be slightly higher to account for the money taken from you previously.

But if you’d counted on receiving your full Social Security check when you return to the workforce, the earnings test could pose a problem for you. Think about how this might affect your household’s income. And if you haven’t signed up for Social Security yet, you may want to hold off. Delaying benefits can increase the size of your checks, at least until you reach your maximum benefit at 70.

3. Other options available to you

Coming out of retirement may seem like the only way to make ends meet, but this isn’t always the case. You may be able to remain retired if you’re willing to make some changes to your budget. You could eliminate plans for travel or discretionary purchases and just focus on the essentials.

If that’s not enough, you may be able to get some additional support from government benefits. For example, blind, disabled, and low-income seniors are eligible for supplemental security income (SSI) from the federal government. This is a monthly check similar to Social Security that you can use to pay your expenses. You can find out if you’re eligible by using the Benefit Eligibility Screening Tool.

Look into benefits available to you at the state and local level as well. There may be programs that can assist low-income individuals and seniors with housing, medical care, and food costs. Together with your savings, this could be enough to help keep you retired.

Returning to work is a big decision, and while it’s one you can undo, you probably don’t want to go back and forth that many times. So before you make your move, weigh the factors listed above. If you decide to get a job, consider looking for something that offers you some flexibility or is more in line with your interests so going to work doesn’t feel like such a chore.

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