Plan to Work After Retirement? You May Want to Rethink That

Working helps us pay our bills throughout most of our adult lives, so it’s unsurprising that those struggling to save for retirement fall back on a job to help them through this phase of life as well.

Seven in 10 workers say they expect to do some work in retirement, according to the latest Employee Benefits Research Institute (EBRI) Retirement Confidence Survey, but some of them could be in for an unpleasant surprise.

The problem with working in retirement

Working in retirement can be a great way to supplement your personal savings, and it has other benefits too. It can give you a sense of purpose and an opportunity to socialize with others. But just because you want to work doesn’t mean you’ll be able to.

Nearly half of all retirees EBRI surveyed reported that they retired earlier than anticipated, and only about 40% of those say they did so because they could afford to retire. Many others were forced to leave their job due to things like illness, downsizing, or caregiving demands.

If you’re just working as a way to pass the time or get out of the house, an unplanned early retirement may not be that big of a deal. But if you were counting on your job to help you cover your essential costs, losing it could be a devastating blow. Without it, you’ll be forced to withdraw your retirement savings quicker than you anticipated, possibly running out of money altogether.

Planning now is key

If you want to remain financially secure in retirement, you should save as much as you’re able to right now, even if you never want to leave your job. Start with a workplace retirement account or an IRA and set up automatic contributions so you don’t have to remember to put aside the money on your own. If you have a 401(k) that offers a match, do your best to claim the full match every year.

Make debt repayment a priority if it’s preventing you from saving for retirement. Look into balance transfer cards or personal loans for high-interest debt. Or you could try the avalanche method. This is where you make the minimum payment on each of your credit cards every month. Then, you put any extra cash toward the card with the highest interest rate first. When that’s paid off, you move to the card with the next-highest interest rate, and so on.

Try to estimate the cost of your retirement so you know how much you need, and don’t forget to factor in your Social Security benefit as well. You can get a rough idea of this by creating a my Social Security account and using the calculator tool there. Subtract your expected Social Security benefit from your total retirement cost to figure out how much you must cover on your own. Try to save as much of this as you can yourself so you aren’t as dependent on a job in retirement.

Have a backup plan in case something goes wrong

You can still work in retirement if you want, but you should have a plan for what you’ll do if you have to retire unexpectedly. Depending on your job, even if you’re not able to be in the office full time, you may be able to work part time or remotely. Or you could look for another job if you lose yours. Keep your professional skills up to date as you age to increase your odds of finding a new position.

Hopefully, you won’t run into any problems, and you can retire when you want to. But if something does come up, you’ll be glad you prioritized saving when you were younger and have a backup plan.

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