5 Key Signs You’ll Need To Work Part-Time in Retirement

Many people have a specific timeline for when they want to retire. For some, the goal is to retire early . For others, it’s to wait until they’re old enough to collect full Social Security benefits — 66 to 67 years old, depending on date of birth.

Learn More: The Average Retirement Age in 2024: US vs. Canada

Check Out: 9 Easy Ways To Build Wealth That Will Last Through Retirement

Not everyone ends up retiring when they want to. Even once you do retire, you might find that you need to continue working at least part-time to live comfortably. While this isn’t necessarily a bad thing, it might not be exactly what you had in mind.

If you’re wondering whether or not you’ll need to keep working in retirement , here are some signs to watch out for.

Money mistakes the super wealthy never make - that you might be doing now.

You Simply Don’t Have Enough In Savings

Yuri Nosenko, a wealth management advisor at Imperial Fund Assest Management , said, “If someone is nearing retirement age without significant savings, it’s a clear warning sign that they may face financial difficulties in retirement, especially given the limited support from Social Security.”

When it comes to retirement savings , there are a couple of rules of thumb to follow:

• 4% rule: This rule suggests that retirees should be able to comfortably live on no more than 4% of their retirement account balance per year (adjusted for inflation). If you have $1 million, you should be able to live on $40,000 a year. If you have $2 million, that number gets increased to $80,000 a year.
• 10x rule: You should ideally have at least 10 times your annual income saved up by age 67. If you earned $100,000 a year, you should have $1 million. If you earned $150,000, you should have $1.5 million.

“On the other hand, even those with savings may encounter financial challenges during retirement if their savings prove insufficient to meet their future needs,” said Nosenko.

When calculating how much you have versus how much you might need for retirement, be sure to account for inflation, medical costs (including long-term care), lifestyle choices, longevity and the unexpected.

You Need To Delay Collecting Social Security

Another key sign noted by James Yarbrough, a managing director with Stonebridge Wealth Management , is that you need to delay Social Security to maximize your benefits.

For every month that you delay collecting your Social Security benefits beyond the full retirement age , your benefits will increase incrementally — up until you turn 70. As of August 2024, the average retiree receives $1,920 a month, according to the Social Security Administration (SSA).

However, your check is based on your average indexed monthly earnings for the 35 years in which you earned the most money. For example, if you work until you’re 66 years old (roughly the full retirement age) and earn $80,000 each year, you’ll get approximately $2,133 a month in today’s dollars.

Thanks to an online calculator provided by the SSA , you can calculate your estimated benefits amount using either today’s dollars or inflated dollars online. If the amount isn’t enough to make ends meet, odds are you’ll need a part-time job or side gig in retirement.

For You: I’m Planning My Retirement: 5 Expenses I Wish I Had Cut Sooner

You Expect To Live Much Longer

Estimating your longevity is a major component of retirement planning . As Yarbrough explained, if someone has longevity in their family history, they may need to work longer to ensure they don’t run out of retirement funds.

The Centers for Disease Control and Prevention (CDC) reports that the average lifespan for an American adult is 77.5 years. More specifically, the average lifespan is 74.8 years for males and 80.2 years for females.

If you plan to retire at the typical retirement age of 62, you’ll need a good 20 years’ worth of savings to live comfortably. And that is assuming you don’t live longer than the average. If your family members do tend to live much longer, or if you plan to retire earlier, there’s a good chance you’ll either need a part-time job or another source of retirement income.

You Struggle With Spending

If you tend to spend more than you should, Jordan Taylor, an independent financial advisor at Core Planning , warned that you’ll probably need to pick up a part-time gig in retirement.

“You could have $3 million banked for retirement and an affordable lifestyle, but if you constantly struggle with falling into and getting out of debt, odds are you’re going to dig yourself a hole in retirement, and then burn through most of what you saved,” he said.

You’re Not Emotionally Ready

People don’t just work to make money. Oftentimes, there are other reasons to maintain a job after retiring.

“If you’re a go-getter, super social, ‘purpose-driven’ worker who enjoys being around really diverse groups of people, you might end up missing the workplace a lot,” said Taylor.

“There are very few places where we can go daily and build ‘close’ relationships with people of various backgrounds, ages, etc. and constantly be accomplishing things. The traditional retirement dream is void of accomplishment [because] retirement is the accomplishment,” he continued.

“Now you golf all day. Do whatever you want. No agenda. No challenge. Just fun, which quickly becomes a nightmare for some folks. The workplace offers a chance to find purpose and meaning, even if just for a few hours a week!”

Don’t Want To Work in Retirement? Start Planning Now

It’s one thing if you want to keep working in one form or another. But if you would much rather build a totally work-free retirement lifestyle, there are a few things you can do.

Firstly, Taylor suggested the following:

• Adjust your lifestyle. Cutting $1,000 a month from your “must have” expenses could make all the difference. “Reducing future monthly expenses is a powerful way to free yourself from the need to work,” said Taylor.
• Adjust your savings. Even if it doesn’t seem like it, chances are there’s always something you can cut out of your savings — even if that something is small. “Cut ruthlessly so you can spend extravagantly (thanks Ramit Sethi),” said Taylor. “The more you save and invest today, the more you’ll be able to spend in retirement.”
• Increase your income. This might mean working a second job before retirement. Or it could mean taking on a side hustle . Whatever the case may be, working extra now might require a little sacrifice, but it can be worth it in the end.

Last but not least, you should try to start planning ahead of time — as early as possible — to get you to where you want to be.

“For pre-retirees who do not want to work in retirement, the only real solution to the problem is to ensure that you have saved enough to fund all of the things you want to do in retirement,” said Jamie Ebersole, the founder and CEO at Ebersole Financial LLC .

“This means planning early and often, so you can envision your retirement in a realistic manner, and you can ensure you have the resources needed to support your retirement lifestyle.”

When you create a plan sooner as opposed to later, you get a much clearer idea of what you can and cannot achieve. The more time you have between making that initial plan and retirement, the more opportunities you have to adjust it as needed.

“Working in retirement is one option to help make ends meet, but planning many years beforehand will give you the best chance of living retirement on your terms,” Ebersole added.

This article originally appeared on GOBankingRates.com : 5 Key Signs You’ll Need To Work Part-Time in Retirement