By Howard Hook, CPA, CFP®.
They leave to good cheer and perhaps some feelings of envy, as a retirement party and gifts from their colleagues usher them off to the next chapter in their lives. Then, for various reasons and maybe in just a matter of months, they un-retire, and return to the workforce, at least in some cases with their tails between their legs.
One recent study reveals just how common this is. One in six retirees, reports the study by Paychex, say they are considering returning to work.
So, how can you stay happily retired?
According to Howard Hook, a CPA and Certified Financial Planner with the fee only financial planning firm of EKS Associates in Princeton, NJ, “Most people do not like surprises and certainly having to re-enter the workplace is not something one would anticipate. Being honest with yourself as to whether it is feasible in the first place to retire, is a good place to start.”
He frequently reminds clients that “retirement is not a two-week vacation.” Most people, he says, return to work because they come to the realization that expenses do not necessarily decrease once retired, and many times increase due to more free time for expensive hobbies. Others, however, return for emotional reasons, whether it’s because they are bored in retirement, feel unfulfilled, or need that sense of purpose work provides.
“People have a hard time understanding the long-term costs of retirement and that the first third of your retirement may look very different spending-wise than the next third and then the final third,” he says. “Where you are financially today may be very different from where you are 10 or 15 years down the road, when higher medical costs are more likely to occur.”
Those considering returning to work, he says, need to ask themselves a number of questions. For example, what affect will returning to work have on you, your family, and your future plans? How will returning to work full- or part-time affect your financial situation (including how will it affect my social security or pension)? And, again being honest, what is the primary reason you are considering returning to work and what are the pros and cons?
Should you return to work, he says, you also need to decide if it will be on a full, part-time or consulting basis, whether it will be what you did before or something new, and how potentially stressful it will be.