Capital Investment Advisors

#174 – Unretirement—Three Reasons Retirees Are Returning To Work

Today, Wes wades into the concept of Unretirement. Multiple studies suggest that some Americans return to work six months or a year after retiring. There are several reasons for the trend. Wes explains the potential motivations and lists essential factors folks need to consider when making this decision. Whether you’re looking for a renewed sense of purpose or a change to your financial situation, you don’t want to miss this episode.

Read The Full Transcript From This Episode

(click below to expand and read the full interview)

  • Wes Moss [00:00:00]:I’m Wes Moss. The prevailing thought in America is that you’ll never have enough money and it’s almost impossible to retire early. Actually, I think the opposite is true. For more than 20 years, I’ve been researching, studying, and advising American families, including those who started late, on how to retire sooner and happier. So my mission with Retire Sooner podcast is to help a million people retire earlier while enjoying the adventure along the way. I’d love for you to be one of them. Let’s get started.Wes Moss [00:00:36]:The concept of unretirement keeps popping up all around me. Maybe it’s because we host the Retire Sooner podcast here and we talk about retirement every day, but the idea of unretirement seems relatively new to me. And maybe it’s because the folks that ultimately I end up working with, a lot of them have been planning for retirement for a really long period of time, and it’s very intentional, and once they do it, they’re pretty locked into it. But even I have seen in real life several times that someone goes into retirement and then kind of changes their mind. Ryan Doolittle from our team here, the Retire Sooner team, recently interviewed, and he has a new podcast called The Happiest Retirees Podcast. But he interviewed Richard Eisenberg, who is a longtime personal finance and retirement author and writer from Next Avenue, and multiple sources and just an all around fine American and a wealth of knowledge around the subject who himself ended up boomerang back into the workforce after a very planned retirement. So he did this completely on his own terms. It wasn’t as though he had to go back to work, but there were a variety of forces that ultimately led him back to saying, I’m just not ready to be done working, at least just not yet.Wes Moss [00:02:04]:

    And a lot of his reasons echo the research I was able to find around this new phenomenon of unretirement. Sometimes we get our best ideas from reporters that are asking us to comment on stories or help them do their research around a new topic. And it was an ARP writer that reached out a couple of weeks ago and wanted some help on an article. And the writer said, I’ve been hearing more and more and starting to research on retirement, and I just love to know what you guys think over at the Retire Sooner podcast, because it seems as though this is a trend that’s picking up some steam and a little bit of momentum. So it led me to dive into the numbers and look at the labor force of people retiring and going back to work and then think about some of the real implications. What if you retire or you’re retired right now and you’re thinking, hey, maybe I’m going to go back to work for just a little bit? How does that impact your Social Security as an example? How does that impact a pension as an example? And we’ll cover that today, here on this episode. So are Americans really unretiring? The simple answer is yes. And there are multiple studies that suggest that we’re seeing this trend pick up over the last call.

    Wes Moss [00:03:25]:

    It year or so, meaning that someone retires and then six months or twelve months or 18 months later, they say, hey, I’m going back to work. Paychecks did a study and found that one in six retirees are considering right now one in six, that’s over 15% of everyone in America right now that’s retired. That’s thinking about maybe going back to work. Now, the reasons are interesting. Here’s what those respondents cited. Number three on the list, 45% of folks said loneliness. Number two on the list just flat out boredom. That’s 52% of folks.

    Wes Moss [00:04:07]:

    And then 53% of people did say some sort of financial need. Those are the top three reasons. And we’ll go over a few more here on today’s episode. Another study by the Indeed hiring lab looked at the overall rate of unretirement, and it’s been rising in recent years. In 2022, the unretirement rate was 3.2% of all retired workers. That’s up from just about 2% in the year 2020. Again, these may not sound like big increases, but that’s a 50% jump in the number of people that are thinking about unpulling the rip cord. Now, we started the Retiree Sooner podcast in the very beginning of 2021.

    Wes Moss [00:04:56]:

    So it’s been over two years now, and I remember the employment numbers rolling in over the course of the year 2021. And there’s a lot of numbers to look at. There’s the unemployment rate, there’s the labor force participation rate, there’s the labor force participation rate in multiple age ranges. So for all workers, you can look at it in the 55 plus range. So people that are closer to retirement, what’s that labor force petition rate look like, and if you go back a couple of years, the number of seemingly retirees really skyrocketed. And here we were on the Retire Sooner podcast. Our goal was, and still is, to help a million retirees retire one year sooner. We thought we were doing a pretty good job because in 2021, it looked like a million or so people retired.

    Wes Moss [00:05:48]:

    And then you take the numbers through 2022. We got to the point where it looked like about 2 million people beyond what was normally forecasted went into retirement. We thought, wow, we didn’t think the retiree student podcast would have this much impact this soon, because looking at the labor numbers, we had reached our goal. We’d almost doubled our goal in the first year or two. Now, of course, we didn’t expect our podcast to have that much real life impact that quickly. And of course, we knew that there were some other forces leading into that, and those forces were largely due to just the incredible life shakeup that we all went through with a pandemic. So there’s no exact number year, but if you look at the labor force participation numbers, the changes at certain age ranges, here’s what we saw on a big picture level in the United States during that 2000 to 2002 period of time. We saw participation in the labor force overall go from around 63 and a half percent to a little less than 62 and a half percent.

    Wes Moss [00:06:57]:

    That’s a decline of a full 1% 2020 through 2022. Now it’s only 1%, but the labor force is giant. The labor force is 165,000,000 people. So 1% of that is about 1.6 million people left the labor force. Remember, you’re not unemployed if you’re not looking for a job. So if you are choosing just to stay home and you’re not looking for work, you don’t count as unemployed. And if you’re not looking for work and you’re not unemployed, you’re no longer in the labor force. If you’re a student, if you’re traveling abroad for six months or a year, again, you’re not in the labor core.

    Wes Moss [00:07:40]:

    So in the BLS or the Bureau of Labor Statistics is doing their analysis, they’re looking at people that are employed, or those people who are looking for a job you’re participating in one way or another. If you really want to look at the unretirement ripples that shook the labor force, you’d look at 2020 or right before the pandemic started until around earlier 2021. And if you look at just the 55 plus group, and these are folks that are I would consider getting pretty close to retirement, maybe they have the means to think about retiring. And that’s the category where we saw the biggest jump in what looked to be, at least on paper, retirement, but maybe it really fully wasn’t. It was just people who were getting close or had already been thinking about it, and COVID just accelerated that by a year or two or three. And I’ve seen a lot of this in real life. A family I work with in the Midwest, husband in the healthcare industry, and the wife in the medical field around physical therapy. Well, guess what? Pretty tough to do physical therapy during COVID Pretty tough to do physical therapy via zoom.

    Wes Moss [00:08:56]:

    They were already getting pretty close to both stopping work, but they had this frustrating year and a half, and in mid to late 2021, one of them, the wife doing physical therapy, just said, look, we’re going to retire in the next couple of years anyway. I’m just going to retire now because I really can’t functionally do my job. So there’s an example of what I would consider someone having a retirement just pulled forward a little bit. Now, in this case, she’s just never gone back to work. But it’s a really good example of people in certain industries that were already kind of close to looking at retirement, just said, okay, I’m doing this a little sooner than I thought, and they’ve never gone back. And it makes sense if you look at the 55 plus demographic in the United States. And again, just looking at the Bureau of Labor Statistics, looking at labor force participation, the 55 plus group dropped from 39 million folks in the labor force pre pandemic to 37 million in 2021. That’s a drop of 2 million people.

    Wes Moss [00:10:04]:

    And again, we’re talking 55 all the way through people either working or in the labor force in their 70s. That’s a big number of extra early retirees, which I would consider anyone that was thinking about retirement but just did it a little sooner due to all of the shockwaves that hit so many different industries because of the pandemic. Not to mention folks that ended up having to take care of someone in their family that was impacted by COVID. So there are a lot of different reasons here, but the numbers are the numbers. Around a million and a half to 2 million people essentially entered retirement during that really short window of a couple of years, far more than would have happened if we hadn’t gone through a pandemic. Of course, we knew that it wasn’t just the Retire Suitor podcast nudging people or 2 billion people quickly to get into retirement, but we like to at least think we’re helping. Now if we’ve looked at the trends from kind of the bottom in labor force participation, 37 million has now slowly, over the last two years or so, or year and a half or so, has slowly climbed back to around 38 and a half million. Still leaves the 55 plus labor force a half a million people shy.

    Wes Moss [00:11:27]:

    So the way I read that is maybe around 2 million people were pushed into retirement a little bit early and million and a half have gone back to the labor force. But we still have a half a million people. The giant number are staying retired. That means a million and a half people are unretiring. And here are a couple more statistics around that. One, core men than women are unretiring. Two, the most common occupations for unretirees are sales, healthcare, education, and I think there’s some reasons why those are industries people are going back to, which we’ll get to. And then what I’ve seen mostly in real life for folks that have decided to do this.

    Wes Moss [00:12:11]:

    Richard Eisenberg. On Ryan Doolittle’s Happy Retiree podcast is certainly in this camp, unretirees are much more likely to be part time work rather than full time. So what are some of the reasons for people going back? Of course, from these studies we’ve seen that people are citing financial need, boredom, loneliness. Those all make sense. And of course, there’s no one particular reason here. I think it’s a whole confluence of reasons that have come together to motivate people out of retirement, back to work, and at least in some capacity. So let’s talk about some of those reasons. One has to do with financial need.

    Wes Moss [00:12:52]:

    Well, that makes sense because there’s been a massive rise in what it costs to live in America. Because I’m a student of the markets and economics, I’m always looking at economic data to see where the economy is headed, how that’s impacting markets. And we’ve been on pins and needles over the last two years watching inflation. A year and a half ago or so, summer of 2022, all the ripples or economic stimulus to get through the pandemic. Like it or not, it happened and it drove inflation through the roof. We ended up with almost double digit inflation in the United States and in a lot of categories. As an example, the used vehicle market, the new vehicle market, transportation services, energy costs were up 2030 40% at one point. Collectively, we saw CPI print at over 9%.

    Wes Moss [00:13:51]:

    Then of course, the Federal Reserve has gone and still continues to be on this interest rate tightening campaigns, kind of their main tool to raise interest rates as a wet blanket on the economy and inflation. And it’s been working. We’ve brought the inflation rate from over nine to around three and a half percent. So the Fed to some extent got the job done. They’re not there yet. They still want inflation closer to 2%, but they’ve made a lot of progress in getting the annual rate of inflation down. That’s great. But here’s what it doesn’t do.

    Wes Moss [00:14:21]:

    It doesn’t help that we’ve already seen prices in aggregate rate rise by 30% or more. So even if we get the inflation rate back to 2%, everything collectively is still over 30% more expensive than it was prior to the pandemic. And if you’re in retirement and you end up having a relatively complicated budget with items that are really subject to that inflation, as opposed to someone that maybe has their house completely paid off or isn’t doing a whole lot of travel, your retiree budget went up a lot as well. And in a lot of respects, going back to work, at least for a couple of years, could really help offset and mitigate that massive rise in the cost of living here in America. Is your cash working for you? For years, banks have gotten away with paying next to nothing for the privilege of holding your money. Today, investors have more options. As the Federal Reserve has raised and raised and raised interest rates dramatically. Why not take advantage of it? If you’re interested in finding a higher yielding solution for the safety allocation of your investment portfolio, reach out to my

    Wes Moss [00:15:43]:

    That’s y So one, the cost of living has gone up and that is for some retirees to rethink their budget, rethink their savings. And in some cases that calculation is, well, I’ve got to go back to work for two reasons. One, I can stop drawing now on my retirement savings, so that gives me time and cushion. And two, I can add to my retirement savings. So it’s this double whammy of kind of getting back on track, trying to mitigate the impact of rising costs. Number two, for some retirees that don’t necessarily need to stop withdrawing and don’t need to start saving more, the extra money is a really nice mental cushion. And I’ve seen this happy too for retirees that end up going back to the labor force when an opportunity for work does present itself.

    Wes Moss [00:16:37]:

    The thought of that extra income, even if you may not need it for, quote, retirement, that extra cushion can really just be extra spending money. So retirees often look at adding a year or two of full time work or part time work as just bonus money that they didn’t necessarily plan on having. And I’ve seen this extra cash cushion go towards, let’s call it guilt free spending, fun experiential spending. Like a multi week Scandinavian cruise that they maybe didn’t think they could pay for, or a long wine tour, a two week wine tour to Tuscany in Italy, or a ten day heritage tour to the Holy Land in Israel. And I’ve seen those are all real life examples of folks that I’ve talked to over the last call it a year or so that have some extra spending money because they’re doing part time work that allows them to indulge a little bit and do it in a guilt free manner. They didn’t expect the cash, they didn’t expect this extra money, so they’re a little less nervous about spending it. Which brings me to number three, and I think this is also driving this conversation about part time work or full time work. We’re still in a really tight labor market.

    Wes Moss [00:17:53]:

    The unemployment rate has been in the three and a half percent range for most of 2023. The last print from the BLS were at 3.8%. That’s still a really low unemployment rate, which means we have a tight labor market. We also know from the Jolts data or the Job Opening Labor Turnover survey that there’s still one and a half job openings, 1.5 job openings or Vacancies for every one person looking. So there’s much core demand to bring people into work. There’s much more labor demand than there is labor supply. And that’s a really good thing for anyone that’s even considering going back to make a little extra money. So it’s not uncommon for fairly new retirees to be asked to go back to their previous company or within the same industry.

    Wes Moss [00:18:42]:

    Think about who has the most knowledge and the most experience. Well, somebody who’s 60 who called it quits a little early. The early retirees are also the most seasoned, most knowledgeable people that can immediately make an impact when they go back to work, as opposed to someone who’s 25 who may have a lot of years to really learn the industry. Even though you may be even more expensive as an retiree, employers are looking for an immediate impact. I think that goes back to if you look at the statistics on what industries people are going back to. It doesn’t surprise me that sales, it’s healthcare and education. Think about education. You can say, Look, I’m okay to work for nine more months.

    Wes Moss [00:19:22]:

    Go back to the school system. The school will say, absolutely, we’d love you for one more year. We have a teacher shortage, and we’re fine. For you to come back to work just for a year, that may be a little more difficult. If you’re going back to a law firm or going to work for a bank or a financial institution that may want a five year commitment. Going back to sales, a sales team is very often, hey, we’d love to take if you’re already experienced, you’re already good, come join the team. Even if you only want to work for a year or two years, we’d love to have you. And then healthcare one of the other sectors where people are going back to work.

    Wes Moss [00:19:56]:

    Who’s going to say no to a doctor or a nurse saying, I think I’ve got another year or two in me. Please do come save some lives. But what I’ve seen as well are people going back to their previous industry in some sort of consulting role because they have a wealth of knowledge to bring back to the table here in this super tight labor market. I think those are some of the economic reasons people are going back or unretiring. But there’s also some real lifestyle drivers here. It’s not easy to get over missing the purpose of your work. And this is not so much about boredom, but missing out on purpose and socialization that comes with your career. Our research shows that the Happiest retirees average nearly four core pursuits.

    Wes Moss [00:20:48]:

    Those are hobbies on steroids that give them great purpose, great direction, that gives them structure to their week, gives them things to get better at. Humans like to get better at whatever they’re doing. The other day, lyd was making fun of me. I said, I have to go to the driving range to practice something I’ve been so bad at being able to get out of the sand. So for you golfers out there, you might know what I’m talking about. I could have a great round, and then I end up in a bunker, and it blows up the whole thing because it takes me two shots or sometimes three shots to get out of the sand. It just ruins everything. So I finally got a lesson on how to get out of the bunker, and after about 15 minutes, I just got it, and a little bit of knowledge really helped.

    Wes Moss [00:21:42]:

    So I said, I got to go to the driving range. I got to practice this. And Lynn, she’s like, you have to practice. She goes, are you joining the PGA? And I said no. I just want to get better. That’s the reality of whatever we’re doing. If we like it and we’re committed to it, it’s just more fun to constantly be improving in anything we’re doing, joining the PGA Tour. And then maybe the biggest factor is the shock of the lack of socialization.

    Wes Moss [00:22:17]:

    So even if you’ve got a good friend, group or lots of close connections or family around when you’re leaving the office or your team or your company, even though we know that work is super low on the list of things that make people happy, people would rather not have to work it’s. Remember number 38 out of 40 on things that make us happy, meaning that it’s something that for most people doesn’t drive a whole lot of happiness. That’s just the reality of the world. But the ping pong of social connectedness when you’re at the office just creates more socialization opportunities, period. And socialization is all about inertia. Once you’re doing things, you end up meeting more people and getting invited to do more things. So if you don’t go to the you may. It’s not just that you missed the Braves game with your office.

    Wes Moss [00:23:10]:

    It maybe means that you’ve missed the Braves game and two or three other things that you talked about while you’re at the Braves game. Yeah, we’re more digitally connected than ever. Great. We’re all on LinkedIn. Great. We’re all on Facebook. Great. But I think by the year 2023, we’ve all learned that social media is just really a net negative when it comes to socialization.

    Wes Moss [00:23:35]:

    It doesn’t help. All it does is make you feel like you’re missing out. People are posting about fun things. It variably when you’re working, they’re going on fun trips. When you’re not on a fun trip, posts are almost always about grandiose something while you’re not in the middle of grandiose anything. And the reality is, it’s pretty rare that you end up with some sort of real new close connection just because of social media. It really has to be something that develops in 3D as opposed to social media is 2D. It’s two dimensional.

    Wes Moss [00:24:17]:

    In humans. You’re meant to connect in 3D. Now, anyone that’s met their spouse or their significant other through some sort of online matching, maybe you think I’m crazy to say that yes, maybe you found somebody online, but you connected in real life, and it wasn’t social media that did it. So here’s three more quick technicals around going, let’s say, going back to work. How does unretiring affect Medicare? How does it affect a pension, and how does it affect Social Security if you’ve already started to take social one? Does it affect Medicare? It could, because going back to work could dramatically increase your annual income. And if you increase your annual income, that could in turn increase your Medicare Part B and Part D premiums. Again, I wouldn’t look at this as a variable on not going back to work, and this would be for anyone that’s 65 or older that’s already part of Medicare. So even though you might have to pay slightly higher premiums at some point.

    Wes Moss [00:25:19]:

    It’s still worth it in a net net scenario. How about a pension? Same thing unretiring shouldn’t have really any impact on a pension amount that you’re already receiving. But again, just like with Medicare, if your overall income rises because you’ve gone back to work now, your overall tax bracket could end up being a little bit higher. And then your take home after tax dollars from that same pension check, again, that shouldn’t be impacted, could be slightly lower. Again, we’re still netting more money here in the end, so I don’t think that’s a variable on why you would go back to work in some capacity if you want to. Now. What about Social Security? This is a little more interesting. Let’s say you retired at age 62 and started Social Security early.

    Wes Moss [00:26:04]:

    You started your Social Security benefits at age 62, and you decide to go back to work at age 64. Well, remember, there is something called the retirement earnings test, and these are rough round numbers here, but in 2023, it’s around $22,000. If you earn over that, then for every $2 you earn over that, a dollar is penalized of your current Social Security. So round numbers, if you made 42,000, that’s $20,000 above the retirement earnings test. 50% of that would be $10,000. So about $10,000 would be deducted from your current Social Security payments. Wait a minute, that sounds terrible. However, you do end up making that money back up, at least over time.

    Wes Moss [00:26:56]:

    So you’d see your monthly amounts reduced in proportion to you over the retirement earnings test. But then let’s say you do this for two years and you had around, let’s say, $20,000. That was, quote, penalized from your Social Security payments. When you do hit your full retirement age, and again, that can be different ages for people. It could be 66 years old. In ten months, it could be 67. But once you hit that FRA, the full retirement age, what you’ve been penalized essentially gets paid back to you by an increased Social Security statement that’s calculated over your lifetime, so you don’t get it back right away. But if you left $20,000 on the table, let’s say Social Security will adjust your monthly payments for you to get that money back, let’s say over the course of 18 or 20 years, whatever they deem your life expectancy to be.

    Wes Moss [00:27:52]:

    I’m giving just a real general overview here. Anytime we talk about Social Security, it’s so complicated and it can get very intricate per person, and there’s lots of different variables. But in general, that’s about how it would work. If you decide to unretire earn a bunch, that reduces your Social Security. But you do end up getting it back, provided you live long enough to do so once you hit your FRA. I’m hoping this was helpful. If it were me, I’d rather all 2 million people that retired a little bit early or extra early to be still in retirement and having that economic freedom, but it’s a complicated world we live in, and there’s variables that are financial, lifestyle and technical that all go into these decisions. So if you’re thinking about unretirement, think through the checklist we talked about today, and just make sure you’re planning on when you do stop working.

    Wes Moss [00:28:50]:

    Let’s say again, and maybe this time it’s for good, that you have your overall retirement planning in check. You know, in general what your spending might look like once you stop working, and that you’re following the 4% plus rule when it comes to withdrawing money over the course of the rest of your lifetime, so that you have a really good chance of not ever having to even worry about running out of money. So here. We love retiring sooner. That’s our whole message on the podcast. But if it’s the right fit for you and your family, I also love unretirement, at least for a period of time.

    Mallory Boggs [00:29:31]:

    Hey y’all, this is Mallory with the Retire Sooner team. Please be sure to you rate and subscribe to this podcast and share it with a friend. If you have any questions, you can find that’s You can also follow us on Instagram and YouTube. You’ll find us under the handle Retire Sooner podcast. And now for our show’s. Disclosure this information is provided to you as a resource for informational purposes only and is not to be viewed as investment advice or recommendations. Investing involves risk, including the possible loss of principal.

    Mallory Boggs [00:30:02]:

    There is no guaranteed offer that investment return, yield or performance will be achieved. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. For stocks paying dividends, dividends are not guaranteed and can increase, decrease or be eliminated without notice. Fixed income securities involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls. Past performance is not indicative of future results when considering any investment vehicle. This information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Investment decisions should not be based solely on information contained here.

    Mallory Boggs [00:30:47]:

    This information is not intended to and should not form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment tax, estate or financial planning considerations or decisions. The information contained here is strictly an opinion and it is not known whether the strategies will be successful. The views and opinions expressed are for educational purposes only as of the date of production and may change without notice at any time based on numerous factors such as market and other conditions.

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