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How to Buck the Growing Unretirement Trend

This article delves into strategies for addressing the increasing trend of unretirement, offering insights into how individuals can maintain financial security and personal fulfillment without rejoining the workforce post-retirement.

How to Buck the Growing Unretirement Trend

Most of us can’t wait to retire. Whether that day is 30 years away or scheduled for some time this year, it represents an exciting new chapter of your life — one where you call the shots. No longer working 40+ hours a week, you get to choose how you spend your time.

Given what retirement represents for so many people, it might sound strange to hear when retirees decide to re-enter the workforce. These people go through a process called unretirement, and it’s gaining popularity.

Unretirement: A Growing Trend Amongst Seniors

Unretirement describes a growing trend where retirees decide to rejoin the labor market. These people pick up a full or part-time job, often in positions completely unrelated to their careers before they retired. 

According to a study by global investment management firm T. Rowe Price, roughly 20% of Americans have already unretired. Many more think they might follow suit. An F&G Annuities & Life survey reveals that half of retired Americans and pre-retirees have considered delaying or have already come out of retirement.

Unretirees are separate from the many Americans who never retire due to their finances and living arrangements.

Why is Unretirement Growing in Popularity?

Money is often the biggest motivating factor behind the trend. Now more than ever, it’s harder to make ends meet.

Inflation Has Impacted Retirement Plans

Today’s cost of living crisis is tough on everyone, but it’s especially challenging for people on a fixed income.

The retirement plan you created in the 80s may not stand up to today’s economic landscape, so your savings might not stretch as far as you imagined. Unretirement makes sense if you struggle to make ends meet with just your pension and social security.

Feeling More Prepared

Everyone should budget for the unexpected, including seniors. Emergencies can challenge your fixed budget just like everyone else. If you struggle to save, you can pick up a part-time job to build an emergency fund.

Paying off Debt

Without savings, you might have to rely on personal loans, credit cards, and lines of credit to help you in emergencies. Whether you apply to get money now or later, personal loan debt becomes a budget priority. Unretirement can help you afford these payments — it can even help you pay off debt faster to free up your budget.

Financing a Big Purchase

Retirement is a time to make the most of your life. For many people, that means seeing the world on a never-ending vacation, buying property in a sunny climate, or simply renovating their homes. Coming out of retirement can help you finance these lifelong dreams.

A job can also help you take care of more practical and necessary spending, like replacing broken appliances or buying a new vehicle. Your unretirement paycheck can help you pay for these expenses and experiences without compromising the overall financial stability of your pension.

Socializing and Beating Boredom

Plenty of people pick up a part-time job because they feel bored and lonely as a retiree. A job that involves working on a team is an easy way to build a routine that gets you out of the house and talking to others. If you’re lucky, your coworkers become acquaintances or even good friends.

Friendships in your older age are important. Roughly one-fourth of older adults feel socially isolated, according to the CDC. Unfortunately, isolation can be devastating — new research shows seniors who are lonely are at a higher risk for serious physical and mental diseases.

Don’t Want to Unretire? Here’s What to Do

For some, coming out of retirement is a choice. But for most people, it’s a decision pushed upon them; they can’t afford to live without picking up extra shifts, even if they wish they could retire in peace.

If you would like to avoid working in your 70s, you have to prepare your finances now to ensure they can support your retirement plans.

1. Financial Planning: Proper financial planning during pre-retirement years is crucial. Working with financial advisors to create a comprehensive retirement plan that factors in potential inflation and unexpected expenses can help you build a more secure retirement. If possible, max out employer-matching retirement funds, and make sure you hit your savings targets elsewhere. 

2. Emergency Fund: Building and maintaining an emergency fund can serve as a financial safety net, helping you cover unforeseen expenses without the need to re-enter the workforce. These savings should be separate from your 401(k) or pension. You need liquid savings sitting in a high-yield savings account that you can access in an emergency. This way, you won’t have to withdraw from your retirement fund early to handle your emergency.  

3. Pay Down Debts: Debt can reduce how much you can invest for retirement. Consider boosting your debt-payment powers to ensure you don’t have personal loans, auto financing, or even a mortgage hanging over your head when you retire. 

4. Change Careers: Some jobs set up workers for retirement better, thanks to higher salaries and better employee benefits. If your work doesn’t offer many safety nets, consider what you can do to transition to a better-paying job. 

5. Budget Spending Carefully: Once you retire, you’re on a fixed income generated from your retirement funds and pensions. In most cases, these payouts represent a fraction of the income you earned while working. You need to learn to live within these new spending limits. Start tracking your expenses, following a budget that ensures you prioritize your income on the essentials before you splurge. 

6. Explore Hobbies and Interests: To combat boredom and isolation as an older adult, you should take advantage of your free time to try new hobbies, volunteer opportunities, and social groups. Engaging in activities that bring joy and fulfillment can enhance your retirement experience.

7. Staying Connected: Maintaining social connections with family, friends, and community groups is essential for a fulfilling retirement. Regular social interactions can improve your emotional well-being and reduce the chances you feel as though you need to return to work solely for social reasons.

Don’t miss: Top Tips to Help Get You Started on Your Investment Journey

The bottom line

In most cases, the unretirement trend reflects today’s tough economic climate. So, you need to adjust your retirement plans to suit the modern financial reality. Follow the tips you learned here today so that you don’t have to come out of retirement.

Hi, I'm Michael, a research writer with expertise in technology, education, business, finance, insurance, real estate, and legal insights. My goal is to share the newest updates and trends from these industries with you.

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