2 Pros and 2 Cons of Working in Retirement | personal finance

(Sam Swenson, CFA, CPA)

Taking on part- or full-time work in retirement will generate mixed reviews. While work can be fulfilling and engaging, time and energy come at a premium in retirement.

What makes this debate interesting isn’t that there’s a single correct answer — but instead, there are a few different lenses through which working in retirement can be viewed.

We’ll discuss two pros and two cons of working in retirement.

Image source: Getty Images.


1. Supplementing your nest egg can go a long way

Without making any predictions about stock market performance, the reality is that the economy currently faces a number of headwinds that may make future returns less than rosy. These include rising interest rates, inflation levels not seen since the 1970s, and still-overvalued stocks in certain segments of the market.

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If the stock market were to fall and not recover for a period of years, you’d likely have to draw on your portfolio at suboptimal levels. Depleting your stock portfolio when prices are low limits its ability to grow into the future, which may mean you eventually have to curtail your spending.

Working in retirement to earn even a little money can prevent you from having to sell stocks at inopportune times and can go a very long way in providing the lifestyle you’re hoping to sustain. Even part-time work — like two or three days a week — can have an outsized effect in protecting your savings.

2. Increased engagement

Studies have shown that retirees who stay engaged, active, and social tend to live longer, happier lives. Finding paid work that doesn’t necessarily feel like work can have several nonfinancial benefits that increase overall well-being, like more robust social engagement and a greater sense of identity.

This does come with one caveat: The job you choose in retirement can’t be one you’ve deemed to be unpleasant. If you don’t enjoy the work, the ancillary benefits won’t have a chance to reveal themselves. But working a job you do enjoy can come with a slew of positive aftereffects — not just money.

If you’re more engaged and find yourself happy doing certain work, you’re likely to live longer. Money aside, working in retirement is one of the ways to attain this goal.


1. High opportunity costs

As time passes, it becomes increasingly clear that there’s a lot more to life than money. If you feel you have enough income between personal savings, Social Security, and retirement plan or pension plan distributions, the free time you enjoy in retirement might be some of the most meaningful you’ll ever have.

Working means time away from family, hobbies, and any other pursuit you deem important. Unless you really need the money, you may find it simply just isn’t worth it to continue to prioritize earning income. Of course, nobody can make this decision except you, so you’ll need to spend some time weighing the costs and benefits as to what really matters.

2. Work can be burdensome

Working in retirement can provide structure, a social outlet, and extra spending money. It can also be an unwelcome source of stress when you’d rather be doing other things. Some people thrive on the daily structure of having a place to go every day; others enjoy the quiet routine of doing nothing in particular.

If work is causing unpleasant side effects, like health problems or family discord, it’s not worth the headache. When you’re younger, you’re likely more able to tolerate the stresses of work. After you’ve retired from your primary career, the day-to-day grind may just not be worth it.

While money can always be replaced, burdensome work will take away your time and energy. In retirement, these are your most valuable resources.

The right answer for you

Whether you should work in retirement is entirely up to you. Some people find that enjoyable work for some extra spending money helps them stay engaged and remain financially secure. Others find that it’s just not worth it, even if it means a scaled-back lifestyle.

What remains true is that the future isn’t guaranteed, so it’s key to balance all the many considerations in retirement — money, lifestyle, family, and health — to arrive at the optimal outcome for you

If you’re unsure, consider a low-lift, part-time, or remote role that can offer some benefits without taking away too much of your time and energy.

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