Un-retiring? What to Consider Before Returning to Work

When you were working full-time, retirement may have been the ultimate goal—what you were working for, saving for and looking forward to. Today, many retirees are returning to work, some to counter the negative impact the economy has had on their retirement savings and others to stave off unexpected boredom.

No matter why you’re returning to work after you’ve retired, consider the impact on your financial situation, as there may be consequences that you didn’t anticipate.

Health Care

Health care costs can be a large part of your retirement budget, especially if you’re not covered by retiree health insurance from a prior employer or Medicare. Returning to work may make you eligible for coverage through an employer’s health plan, reducing your out-of-pocket costs and leaving more money in your budget for other things.

If you’re currently receiving retiree health insurance benefits from a former employer, be careful about switching to a new employer’s plan. Retiree health coverage is valuable, so it’s essential that you closely review plan details before giving it up.

If you are currently covered by Medicare, you should check with any new employer’s human resources department to find out how their health care coverage works in conjunction with Medicare.

Reentering the work force may offer other health care benefits, such as dental and vision insurance or a flexible health care spending account that may not be otherwise available to retirees.

Social Security

If you are receiving Social Security benefits, going back to work before you reach your full retirement age will reduce your benefit amount. Full retirement age had been 65 for many years. However, for people born in 1938 or later, that age has gradually increased until it reached 67 for people born after 1959.

You’ll only see a reduction in benefits if you exceed the Social Security earnings limit. Here’s how it could impact you if you return to work:

  • Before your full retirement age: You will lose $1 in benefits for every $2 you earn above $14,160.
  • In the year of your full retirement age: You will lose $1 in benefits for every $3 you earn above $37,680 during the months before you reach full retirement age.
  • Once you hit your full retirement age: There is no reduction in benefits, regardless of your earnings, beginning with the month you reach full retirement age.

Note that these reduced benefit amounts don’t really mean you are losing any money: you will get it back in the form of a higher benefit amount once you reach full retirement age. In fact, some un-retirees opt to pay back Social Security earnings they have already received in order to restart their benefit payouts at a later date—at an older age and a higher rate. This may make sense if you have the cash to pay back the benefits you’ve received and are in a position to wait a little longer before you begin collecting benefits.

Another consideration when it comes to your Social Security benefits is taxation. Your benefits may be taxable, depending on your modified adjusted gross income (MAGI).

Find out more about how going back to work could affect your Social Security benefits at this website.


You worked hard to earn your pension, but returning to work after retirement—especially for the same employer—could have a negative impact on your pension eligibility. Pension plans vary greatly, so it’s important to look into the details of yours and consult with your human resources representative before returning to work.

Retirement Savings

Continuing to invest in your retirement accounts and continuing to build up your retirement fund can be a great benefit of returning to work. You can contribute to a traditional IRA until age 70½ if you have earned income, so returning to work can give you an opportunity to increase the amount in your IRA fund. The tax deductibility of those contributions will depend on your income. There are no age restrictions for contributions to Roth IRAs, but the contributions are not tax-deductible. In addition, you can contribute to your new employer’s retirement plan.

If you are returning to work for your former employer, you may also be able to delay required minimum distributions from that employer’s 401(k) plan beyond age 70½. This can give your retirement savings more time to grow tax-deferred.

A Plan for Your Un-Retirement

You planned for your retirement. Make sure you plan for your un-retirement. Consider your options and weigh the pros and cons carefully. Review the details of pension, health care, and savings plans to see how a return to work will affect your eligibility and benefits. Your financial advisor can help you determine the best course of action and adjust your investment and retirement plan to account for this and other life changes.

About the author

Garth Scrivner, CPA/PFS, CFP®

Garth has almost 10 years of experience in financial services in a variety of roles. Prior to joining StanCorp Investment Advisers, he was a principal in his own advisory firm, serving individuals and families in the Albuquerque area with comprehensive financial planning and investment management. He is a Certified Financial Planner® professional, and has his bachelor’s degree in accounting from New Mexico State University.


Leave a comment
  • I retired at age 62. I have decided to return to work full time at age 65 in a couple days. I have not worked at all this year and will be 66 1/25/16.

    What should I do about my SS and Medicare at this point

  • My husband is one year from full retirement, but is planning to take benefits this year, as he wants to work in a new job opportunity. If this job does take off, he will be making more than the 14,100 limit. Does he pay back 1/2 his earnings (over the 14,100)up to the max benefits paid (which would be $24,000 for the year until he reaches full retirement) or half of everything even if it is more than the $24,000 benefit paid for the year?

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