Last week, we began our current blog series focusing on some of the psychological impacts of retirement. We discussed the emotional transition that comes with retirement, along with the shift from an accumulation mindset to a decumulation mindset. As our clients begin preparing for retirement, oftentimes they consider working part-time. Moving from full-time work to part-time work can represent a gradual shift to full retirement. There are plenty of good reasons to pursue part-time work, but it doesn’t come without challenges.
Pros of Working Part-Time During Retirement
Let’s discuss some of the reasons a part-time job might be a good move for you. In addition to providing some spending money, working a part-time gig may provide you with some less obvious benefits, including a renewed sense of purpose and rich relationships.
Additional Income
When we put together initial financial plans for new clients, it’s very common for clients to choose to plan on working part-time as they slow down so that they can spend a little more or retire a little earlier. Working part-time can provide a steady stream of income that can help supplement retirement savings and reduce reliance on withdrawals from retirement accounts. If you want to retire early or if you don’t have as much retirement savings as you would like, a part-time income stream might mean the difference between a financial plan that works and one that doesn’t.
More Social Interaction
Many retirees find that after they stop working, they don’t have as many opportunities to interact with others on a daily basis, which can lead to feelings of loneliness or isolation.
By working part-time, you can stay connected with others, build new relationships, and maintain a sense of community. This can be particularly important if you do not have a strong social network outside of work.
Increased Sense of Identity and Purpose
Whether good or bad, many workers put their identity in their work. This can be a particularly true of men we’ve worked with, but we’ve seen it in women as well. In our last blog article, we discussed how developing or maintaining a healthy identity outside of work can help you with the transition out of the workforce. With that said, continuing to work part-time can provide you with a sense of purpose and identity if you define yourself by what you do, which can be important for your mental and emotional well-being. It can give you a sense of accomplishment and help you maintain a sense of purpose, even as you age.
Well-Being and Personal Growth
Work provides a chance to learn new things and develop new skills. This can be important for mental stimulation and keeping the brain active. It can also lead to a greater sense of confidence and self-esteem. Further, working part-time can help retirees stay mentally and physically active, which can be beneficial for overall health and well-being.
Group Health Insurance
If you are retiring before you are eligible for Medicare at age 65 and you don’t have a spouse whose insurance you can join, you’ll need to consider how you are going to obtain health insurance. There are different strategies for obtaining coverage at an affordable cost. One of them is to work enough hours for an employer who offers group health insurance benefits.
Cons of Working Part-Time During Retirement
Despite the many benefits, becoming a part-time employee isn’t for everyone. Consider whether the downside effects outweigh any potential benefits for you and your family.
Reduced Leisure Time
One of the more obvious disadvantages of working part-time during retirement is that you will be left with less time to pursue other interests. Working part-time may limit the amount of time you have for hobbies, travel, or other leisure activities. You will want to clearly understand how much time is expected of you in any job, what the time-off policy looks like, and how much flexibility you will be given.
Potential Stress
Working a part-time job during retirement can create stress in a number of ways. First, it can be a stressor on your time. If you are already busy with other commitments, such as caring for grandchildren, volunteering, or pursuing hobbies, adding a part-time job to the mix can make it difficult to manage your time effectively. Juggling multiple responsibilities can leave you feeling overwhelmed or stressed.
There may also be emotional demands that come with your part-time job in retirement. This may include dealing with difficult customers, coworkers, or managers. These interactions can be stressful and may leave you feeling drained or frustrated.
In addition, there can be financial pressures. If you are working part-time to supplement your retirement income, financial pressures can also contribute to stress. If you are not earning enough to cover your expenses, or if unexpected expenses arise, you may feel anxious or worried about your financial situation.
Work-Life Imbalance
Working a part-time job can sometimes blur the boundaries between work and personal life. As we already mentioned, many part-time jobs offer flexible scheduling, which can be a great perk. However, this flexibility can also make it difficult to fully disconnect from work. For example, if you have a shift in the morning, you may find yourself checking work emails or thinking about work-related tasks during your personal time in the afternoon or evening.
Home-based work is more popular than ever thanks in part to the COVID-19 pandemic. While working from home can be convenient, it can also make it difficult to separate work from personal life. If your workspace is in the same room as your relaxation space, it can be challenging to fully disconnect from work and switch into relaxation mode. This is true during your full-employment years, but it can be particularly frustrating for retirees working part-time who are trying to transition away from work mode.
Overall, it is important to set boundaries and prioritize your personal time when working a part-time job during retirement. This may involve creating a designated workspace, setting specific work hours, and avoiding work-related tasks during personal time. By being mindful of these potential challenges, you can ensure that your work-life balance remains in check and that you are able to fully enjoy your retirement.
Decide Carefully
While there are certainly benefits to working part-time during retirement, it is important to consider the potential drawbacks as well. By being mindful of these factors and setting realistic expectations for yourself, you can minimize the stress and enjoy the benefits of a part-time job. Ultimately, the decision to work part-time during retirement will depend on individual circumstances and preferences. It is important to weigh the pros and cons carefully before making a decision.
If you’re wondering about whether you need to work for financial reasons, a financial plan can help a great deal. We work with a lot of retirees who reach out to us for that very reason. Contact us to help you understand whether you’re on track to meet your financial goals with or without a part-time job.
