When you retired, you made the transition from being on a company's payroll to paying yourself with your retirement savings. If you were one of many retirees forced back into a job during the recession, don't despair. You survived the work-retirement transition and you can do it again. We provide six tips to help you make the adjustment.

  1. Adjust Financial Objectives
    Before retiring, you were accumulating and saving in anticipation of a future life of leisure. During retirement you were preserving and spending. If you're going back to work, your income needs may determine whether you need to continue preserving and spending or if you have enough extra money to go back to accumulating and saving.

    Your choices for saving change if you're over 72.5 because of the age limits for contributing to your traditional IRA and some annuities. Instead, make contributions to a Roth, which doesn't have an age limit, but does have income limits. For younger workers who retired early, take advantage of your new employer's retirement plan.

  2. Check Your Social Security Status
    If you are receiving social security benefits and had to go back to work, whether or not your benefits will change depends on your age when you started receiving benefits. In some instances more of your benefits may be taxable due to the additional income. On the positive side, your social security benefits may be recalculated to reflect the additional years of work and could result in a bigger check. Consult the Social Security Administration website to determine the net result of your new income.

    The annual social security cost of living adjustment won't take place this year because it is tied to inflation, and inflation is flat. This means you'll have to adjust your own personal budget to accommodate any price increases. (Find out how to work the system to get the highest total benefits the law allows. Check out 4 Unusual Ways To Boost Social Security Benefits.)

  3. Put Retirement Disbursements On Hold
    If you make enough money with your new job that you don't need withdrawals from your IRA, stop taking distributions. The IRS is giving you a break on required minimum distributions for 2009. You don't have to take them out. This should save some taxes.

    It also reduces the need to sell deflated investments giving them an opportunity to recuperate. Next year, if you still don't need the income, take the distribution and pay the taxes, then invest the proceeds in a Roth IRA. (Learn some sensible strategies for making your hard-earned savings last for as long as you need them. Check out Managing Income During Retirement to learn more.

  4. Rebuild Your Portfolio
    It is time to adjust your portfolio. You still need growth, because prices will continue to increase, but your portfolio should be weighted toward generating income for your return to retirement. Build a diversified portfolio of short, medium and long-term CDs, bonds, annuities, and growth and income equities.

    Even though interest rates are low, parking huge amounts of cash won't generate income for the long term. Getting totally out of the equity market is a mistake because you lose the opportunity to regain any losses you've endured over the last few years. Just like you've already found out, your income needs may continue to increase.

  5. Evaluate Your Insurance Needs
    Recalculate the amount of life insurance you need now. Consider outstanding debt, and the amount of legacy you choose to leave behind. If your insurance needs are lower, pull cash value out to use for investments and income. Reduce the face value of the policy, which will decrease your premiums. (The most difficult aspect of this complex product is determining how much coverage you need and why. Read Top 10 Life Insurance Myths.)

  6. Reconsider Your Lifestyle Choices
    Now is the time to explore alternate options for housing, transportation, your proximity to family and even the hobbies you enjoy. For example: if your house is paid off, but property taxes and maintenance costs keep going up, determine if it is indeed worthwhile to keep it. Of course, you want to try to wait for home prices in your area to uptick if you decide to sell. Maybe a condo, retirement village or living with your children is the better option. (Setting a target amount is the first step. We show you how to calculate your goal and how to reach it. Read Determining Your Post-Work Income to learn more.)

Going back to work doesn't have to be a dreaded event. Your new career may lead to new found enjoyment as you age. Make the most of your return to work by preparing for the future.

Related Articles
  1. Retirement

    Find an Affordable Timeshare on a Retiree's Budget

    Vacations can be expensive, especially on a fixed income. These tips will help you buy a share in a getaway property that's not too pricey.
  2. Retirement

    What to Do When Your Doctor Doesn't Take Medicare

    Stay and pay the full fee? Cut and run to another provider? Five ways to cope when Medicare threatens to break up you and your medico.
  3. Retirement

    4 Reasons Why Americans Retire in Costa Rica

    Understand why more and more Americans are deciding to retire in developing countries. Learn about the top five reasons why Americans retire to Costa Rica.
  4. Retirement

    4 Reasons Why Americans Retire in Mexico

    Learn why Mexico's low cost of living, inexpensive health care, natural beauty and culture make it such a popular retirement destination for Americans.
  5. Retirement

    The Cities Where the Ultra-Rich Retire in Florida

    Understand why the Florida communities of Miami Beach, Palm Beach and Key West serve as magnets for the ultra-rich retirees who descend on the state.
  6. Professionals

    Is Delaying Social Security Until 70 a Good Idea?

    Soon to be retirees are often told it's best to wait until age 70 to collect Social Security. Here's why this is not always the best advice.
  7. Professionals

    Top Tips for Maximizing Social Security

    Between delaying filing, claiming strategies and taking advantage of special marital benefits, there are several ways to maximize Social Security.
  8. Retirement

    The Better Way to Save: Life Insurance or IRA?

    Sure, you can tap your permanent life insurance policy to help fund your retirement. But in most cases, an IRA is the better choice. Here's why.
  9. Investing Basics

    Statistical Proof That Buy-and-Hold Investing Pays Off

    Learn about how the data suggests that the buy-and-hold investment strategy still works, even after the huge declines of the Great Recession.
  10. Retirement

    The 5 Best Retirement Communities in Austin, Texas

    Discover five of the most desirable retirement communities for seniors located in the Austin/Georgetown metropolitan area in Texas.
  1. Can I borrow from my annuity to put a down payment on a house?

    You can borrow from your annuity to put a down payment on a house, but be prepared to pay an assortment of fees and penalties. ... Read Full Answer >>
  2. What are the main kinds of annuities?

    There are two broad categories of annuity: fixed and variable. These categories refer to the manner in which the investment ... Read Full Answer >>
  3. What are the risks of rolling my 401(k) into an annuity?

    Though the appeal of having guaranteed income after retirement is undeniable, there are actually a number of risks to consider ... Read Full Answer >>
  4. How do I get out of my annuity and transfer to a new one?

    If you decide your current annuity is not for you, there is nothing stopping you from transferring your investment to a new ... Read Full Answer >>
  5. Are Cafeteria plans exempt from Social Security?

    Typically, qualified benefits offered through cafeteria plans are exempt from Social Security taxes. However, certain types ... Read Full Answer >>
  6. What are the biggest disadvantages of annuities?

    Annuities can sound enticing when pitched by a salesperson who, not coincidentally, makes huge commissions selling them. ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!