Thinking About Unretiring? You’re Not Alone

Thinking of unretiring? You're not the only one. Punching a time clock is still part of the regular routine for many older adults. In fact, Americans over 75 are the fastest-growing age group in the workforce, more than quadrupling in size since 1964, according to the Pew Research Center. Some experts now forecast this demographic will double over the next decade. So much for basking in the sun. 

The share of previously retired baby boomers returning to the workforce reached a five-year high of 13.2% last year, data from LinkedIn show. That's an increase of 23.9% over 2022. Why? Longevity and inflation were cited as the main factors. 

“Depending on when you plan to retire, you may have another 30, 40, 50 or more years of life — and that’s a long time to drift aimlessly,” LinkedIn quoted a recent un-retiree as saying.

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What are the motivating factors? 

First, people are living longer. According to a United Nations estimate, the world had just 27,000 centenarians in 1970. Now, the total of global centenarians tops 500,000 and could reach 3.5 million in 2050. 

Second, Social Security benefits. Although you can start taking Social Security as soon as age 62, and you may be entitled to Medicare at age 65, that’s not full retirement age (FRA) for Social Security purposes. Your FRA, the age you need to reach to receive 100% percent of your monthly benefit, kicks in at around 66 or 67, depending on your birth year. However, for each month you file for benefits before reaching FRA, your benefits are reduced permanently. 

On the other hand, if you delay your retirement past the full retirement age, your Social Security payment will increase by a percentage for each month, up to 8% per year. That is, until you turn 70. At that point, you’ll no longer be eligible for any additional increases.  

Third, money. Unfortunately, the LinkedIn story also reveals that most people haven’t saved enough to retire comfortably. According to a recent AARP survey, making extra money was the most common factor driving some Americans back to the workforce, 

Fourth, making connections. Financial planner Judith Ward said many retirees consider rejoining the workforce because it’s a “powerful way to make social connections and reestablish a sense of purpose.” George Jerjian echoed her sentiment. “Sure, money is a concern, but the biggest retirement challenge that no one talks about, in my experience, is finding purpose.”

Where are unretirees working

According to LinkedIn data, most of the 60.3% of baby boomers who held a job in the last year were employed full-time. The remainder (39.7%) were self-employed. Many boomers also found jobs in the Sun Belt — a region with sunshine and low taxes that stretches across the southern U.S., from Florida to California. 

Besides location, AARP Vice President Carly Roszkowski says, “Many older Americans are “starting their own business driving for Uber or DoorDash — jobs that didn’t exist 15 to 20 years ago.”

Proceeding with caution

Retirees who decide to return to work, however, must be careful with their Medicare coverage. That’s because both Medicare Part B and Part D premiums are based on your income. Your premium costs could increase if you begin making more money. 

Medicare coverage also comes into play if you go back to work for a company that offers a health care plan that qualifies as primary coverage. If so, you can drop your Medicare Part B and re-enroll later without penalty. Once you're done working, you have eight months to re-enroll, or you may run up against a late enrollment penalty.

It may also be possible to have both Medicare and private health insurance through your new employer — one will be your primary coverage, and the other will be secondary. If you do have both, you can't put money into a health savings account (HSA) through your employer without facing a tax penalty.

Another consideration before unretiring is the possibility of changes in your taxes. The extra cash you make may push you into a higher tax bracket. This is especially true for anyone with additional income from a pension, retirement account or Social Security. 

According to Kiplinger, there are ways around this. You can consider converting some of your tax-deferred retirement accounts into Roths, You'll pay taxes upfront, but you won't pay income tax when you withdraw your money because you already paid the tax when you contributed to them.

You also don’t have to take minimum distributions from these accounts. That means you aren’t unnecessarily adding income that might push you into a higher tax bracket. A financial adviser may be able to help you understand the big picture while also finding ways to lower your tax burden should you decide to unretire.

How to unretire

Suppose you’re one of the one in five retirees unretiring and not sure where to start. In that case, Kerry Hannon, a workplace author and columnist, recommends focusing on upskilling and cultivating your network. “Getting your wider community involved in your job search — not family or close friends — will help the most,” she said. “It’s the people who participate in your same hobbies who you don’t know as well who might keep you in mind when they hear of opportunities.”

That’s fine for younger people, but getting your foot in the door can be a little more daunting when you're older. Plus, many older workers fear age discrimination will hurt their chances of landing a role, AARP’s Roszkowski said. “You want to include your credentials, but you don’t have to include graduation dates.” 

Does the workforce need older workers?

Baby boomers bring a lifetime of experience and skills that span decades of employment to the table. A recent LinkedIn survey showed that boomers are also the least likely generation to feel burnt out on the job, and separate Bain research shows they feel more loyal to their employers than other generations. Besides that, research featured in Harvard Business Review shows that teams that span generations can also result in stronger overall performance and more productive collaboration.

Recent findings from LinkedIn’s Workforce Confidence survey also show that more than half of Gen Zers and millennials in the U.S. say they need a mentor at work. Mentoring relationships can help mentees develop their careers and allow mentors to cultivate a greater sense of purpose and meaning.  A win-win for everyone.

Note: A version of this item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

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