Ah, retirement. The freedom of not going to work every day …

Actually, let me rephrase that. Retirement: The freedom of not having to go to work every day.

Over the years, I’ve noticed a trend among many of my clients. The ones who retire often don’t stay retired. Sure, they might leave their stressful jobs. But then—sometimes after a short break—they embark on a second career.

Without as much pressure to earn a big paycheck, they take on work that offers more flexibility or gives them a sense of purpose. They do part-time consulting, open small businesses, or transition into new fields.

Plan to work past 65? You’re not alone.

According to a Gallup poll released in May 2017, 74% of Americans planned to work past retirement age. Most of them (63%) planned to work part-time rather than full-time.

It’s not a surprising statistic when you consider how challenging it is to save enough to retire, especially if you expect to live longer or don’t have a pension. Continuing to work part- or full-time is one way to fill in financial gaps.

However, money isn’t the only reason people plan to work. Forty-four percent of people who plan to work part-time say they want to keep working part-time.

A good job can provide you with a routine, a sense of purpose, and friendships. You might find the same benefits as a volunteer, but the financial incentive may provide extra motivation.

Avoid retirement pitfalls

A paycheck—even a modest one—can play an important part in your financial plan as you enter retirement. But continuing to earn money doesn’t mean you can put off other retirement decisions.

A little planning can help you avoid Social Security, tax, and health care missteps that might erode your income. Here are a few pitfalls to avoid:

  • Taking Social Security early. It may be tempting to sign up for Social Security as soon as you’re eligible, at age 62. But if you take the benefits early and you’re still working, part of your payment could be withheld temporarily. You’ll get it back at full retirement age (66 or 67, depending on your birth year), but why not wait to file for benefits? Your payments will increase every month you wait until you hit age 70.
  • Failing to take required minimum distributions (RMDs). When you turn 70½, you must take RMDs from your tax-deferred retirement accounts. If you’re working and participating in a plan, you may not have to take distributions from that plan. However, you still have to take distributions from IRAs and any other plans you may have. If you don’t take your RMD, or you take less than the full amount, you’ll owe a 50% federal penalty tax. And you’ll still have to withdraw the required amount and pay income tax. (Not sure how to calculate your RMD? Vanguard’s RMD Service can help.)
  • Underestimating taxes. Working (in addition to drawing down on retirement accounts) could push you into a higher tax bracket. It may be worth consulting with a professional tax advisor to determine the best way to reduce your taxable income.
  • Triggering Medicare surcharges. Working in retirement provides you with greater income, which can mean higher Medicare costs. Retirees in higher income brackets pay more for Medicare Part B. The Tax Cuts and Jobs Act of 2017 lowered these brackets, which could affect you in 2018. In 2017, higher payments only applied to people making more than $214,000 (singles) and $428,000 (married filing jointly). The highest payment for Part B—$428.60 per month—now applies to people who earn more than $160,000 (singles) and $320,000 (married filing jointly).

Build the life you want

Working in retirement offers structure and financial security. But it’s not for everyone. Deciding how to spend your time is a personal decision and often a difficult choice to make.

Not sure how you picture spending your retirement? Take our retirement lifestyle quiz. It’ll give you insight into how you want to spend your time when working is an option, not a necessity.

Then you can decide what you really want to be.


  • All investing is subject to risk, including the possible loss of the money you invest.
  • When taking withdrawals from an IRA before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax.
  • We recommend that you consult a tax or financial advisor about your individual situation.