The last thing you might expect someone to say when you ask about their retirement is that they are enjoying their new job, or that they intend to get one.
It may sound a bit off, but that is exactly what some retired folks are doing here in Canada, and there are a host of reasons. Boosting income is always near the top of the list, but it is not only about the money.
I have seen many different levels of retirement planning (or lack of) and even with the most robust and sound plans, continuing to work in some capacity can alleviate some issues that can potentially develop post career. It is becoming more common for people to continue working once they’ve reached the traditional age for retirement.
The number of employed Canadians aged 65 and older more than doubled from six per cent in 2000 all the way up to 13.8 per cent in 2020.
Let’s look at some of the reasons why:
It can be very easy to assume that by the time a person reaches retirement age, that they will have enough money set aside to guide them through their golden years. That is just not always the case.
Not everyone retires feeling entirely satisfied with their financial situation, especially during this time of high inflation and market volatility. A 2022 survey found that only 33 per cent of Canadians who were already retired or within 10 years of retirement admitted to being where they wanted to be financially.
The amount of money that counts as financial security is subjective, and what’s considered a comfortable retirement can differ from one person to the next. It’s impossible to predict how long your retirement will last, making it difficult to know how long you’ll need your retirement funds. Will what you’ve saved, in addition to government benefits, be enough to span 10, 20 or perhaps 30 or more years? A detailed plan that indicates your major sources of income can help answer this question.
Sometimes, working to supplement retirement income may become a necessity. Unanticipated expenses, including those related to personal health, could be responsible for depleting what was initially considered to be an ample retirement fund.
On the positive side, earning extra money could help a retiree delay collecting government pension and benefit payments that increase in value the older you are when you start drawing from them (see CPP and OAS). Moreover, if the job comes with a workplace investment plan, it could provide an additional boost to financial well-being.
Like any stage of life, retirement comes with its share of challenges – and maintaining good health usually ranks highly among them. Thanks to advancements in medicine and education, the life expectancy of an average Canadian now sits at 82. Predictably, the average number of years spent in retirement is also getting longer. A number of those years may be spent dealing with serious health conditions or the limitations of a disability. Many older people (29.8 per cent of adults 65 to 79 years and 37.5 per cent aged 80 and over) are affected by two or more chronic illnesses.
Continuing to work can present an opportunity to remain physically active and mentally engaged while earning some extra money. There’s also the possibility that a job will come with an employee benefits package that can help with personal care-related costs. However, working could pose a challenge that may not be sustainable. Planning for medical costs in advance could help avoid being at a disadvantage during a time when you may need financial security the most. Retirement planning should include a close look at current personal or employer-sponsored health insurance coverage, so you can consider lining up a suitable replacement.
Some of the pleasure in retirement can come from the freedom of not having to work. After all, there’s more time available for hobbies, family, travel and just enjoying life. But retirement can also lead to spending more time alone than anticipated. Isolation and loneliness are common issues for many retirees. Your spouse, friends and former co-workers may still be employed, and your children may have busy lives of their own. The end of a familiar routine is a change that not every new retiree will happily accept. Working in any capacity can be a way to relieve boredom and maintain a sense of purpose and belonging.
Working from home
Depending on the nature of the job, working in retirement may be easier now that working remotely is broadly accepted, eliminating the barriers associated with working on site. Retirees who pursue the option to work from home can earn income and stay connected with a broader network of professionals, albeit at a physical distance.
It’s important to remember that many jobs involve some level of stress and anxiety, which can affect mental health. However, stepping away from the workforce can leave some people without a primary purpose and sense of self-worth that was previously sustained by being employed. Weighing the benefits and drawbacks of returning to the workforce or not should involve some serious thought as to how well each path will suit you.
After working for a long time in a former role or profession, a post-career job should be in a field that you find exciting, rewarding or simply worthy of your time and effort. If making large sums of money or managing people is your motivation, and you are physically and mentally capable of working at an intensive pace, consider postponing retirement until you are finally ready to lower the curtain on your career.
Update your plan
Retirement doesn’t eliminate the need to seek financial advice and set new goals. Your advisor can be just as important during retirement as in the years leading up to it. You will want to make sure that you have a plan in place to reach your goals, even if you are happily working away in your new “retirement job”.
THIS ARTICLE IS PROVIDED AS A GENERAL SOURCE OF INFORMATION ONLY AND SHOULD NOT BE CONSIDERED TO BE PERSONAL INVESTMENT OR LEGAL ADVICE. READERS SHOULD CONSULT WITH THEIR FINANCIAL OR LEGAL ADVISOR TO ENSURE IT IS SUITABLE FOR THEIR CIRCUMSTANCES.