The 5 Consequences Of A Working Retirement

By Mark P. Cussen, CFP®, CMFC, AFC | February 01, 2011 AAA
The 5 Consequences Of A Working Retirement

The traditional concept of retirement involves the cessation of working for a living on a daily basis. However, the current political and economic uncertainty has forced many older workers and retirees to alter their retirement plans in many ways. Of course, one of the most common - and simple - remedies for financial uncertainty is to continue working. And this is the only path available for many lower and middle-class workers who have seen their company pensions and personal retirement portfolios shrink to a fraction of their former values. But the ramifications of working during retirement aren't all bad and can provide benefits that go beyond the balance sheet. (For related reading, also take a look at Top 6 Ways To Ruin Your Retirement.)

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Cash Flow

Of course, the most obvious financial benefit of continuing to work when you expected to be retired is the additional income that you reap. Some people continue to work their old jobs for another few years, while others may quit their previous jobs and work part or full time for another employer. But even a worker employed for 20 hours a week at $10 an hour will generate income equivalent to that of a $100,000 retirement portfolio generating 10% per year on a pretax basis. Perhaps just as importantly, continuing to work during retirement reduces the number of years over which the retiree must spread his or her retirement savings when the time comes to stop working altogether.


Loss of Time

Those who are required to continue working will most likely have to postpone some or all of their retirement plans, such as taking that leisurely trip to the West Indies or building an enormous model train empire in the basement. Working during retirement leaves less time to do the things that you always imagined you'd have time for when you left the workforce. This is perhaps the biggest disadvantage to working during retirement.

Emotional Adjustment


Those who carefully planned to retire at a certain time and then had to adjust their schedule may struggle with deep disappointment or even loss of personal dignity in some cases. The harsh reality of having to get up in the morning for work at age 70 can eat deeply into the psyches of many people, especially if they had planned to be busy enjoying their grandchildren at this point in their lives. Counseling or other professional help may be necessary in some cases.

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New Career Satisfaction

This represents the other side of the coin from the previous issue. Some who must keep working may be able to start a new career in another field that provides emotional satisfaction. Some may find fulfillment working at a store related to a hobby or other interest, while others might enjoy doing charitable work, such as a stint in the Peace Corps.


Health Issues

Continuing to work into one's declining years may not be what the doctor ordered in many cases. Older workers should monitor their health carefully and take care not to overexert themselves. However, the additional financial security and health care coverage that can come with continued employment can also serve to reduce stress and provide peace of mind. But those with health concerns should think carefully about the risks that come from working during old age.

The Bottom Line
The consequences of working during retirement can be both good and bad. In many cases, the benefits of this course of action will outweigh the disadvantages, but several factors must be weighed carefully in order to accurately determine the feasibility of maintaining employment during your declining years. Doctors, counselors and financial advisors may all have valuable input for those grappling with this decision. (For additional reading, also see 5 Tax(ing) Retirement Mistakes.)

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