4 Ways Unretiring Might Actually Cost You Money
Retirement: the magical period of life where you no longer have to work for your money. Instead, after years of saving and investing, now your money should work for you. However, many retirees are rethinking this reality, with millions “unretiring.”
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AARP explained that unretiring is a post-pandemic trend where more retirees are reentering the workforce. Many are returning to work to increase their social interactions, offset the effects of inflation or find a new purpose and passion. 2.4 million people who retired during the COVID-19 pandemic before they originally planned to have now reentered the workforce.
However, reentering the workforce could result in higher costs from everyday expenses, higher taxes, more expensive healthcare and more. There are several factors you’ll want to consider before deciding to unretire, which could end up costing you big.
Here are four reasons why unretiring might actually cost you money, according to MarketWatch:
1. Higher Day-to-Day Expenses
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While reentering the workforce even just part-time might boost your monthly income, it might also result in higher expenses. The cost of commuting, coffee from the local cafe and casual lunches with coworkers can all add up fast. By continuing to stay out of the workforce, you may end up saving more money than you’ll earn from a part-time retirement job.
2. Higher Taxes
As a retiree, Social Security benefits are tax-free for single individuals who earn under $25,000 or for married and joint filers with a household income of under $32,000. Once you exceed those thresholds, benefits are taxed at different tiers depending on the person’s modified adjusted gross income (AGI). So, returning to work will mean more income, which could put you in a higher tax bracket and result in Uncle Sam taking a bigger chunk out of not only your take-home pay but potentially from your Social Security benefits too.
3. Higher Healthcare Costs
For retirees who earn less than $103,000 annually, Medicare Part B premiums are $174.40 per month in 2024. However, people who earn more than $103,000, or married couples who file taxes jointly and earn more than $206,000 combined, will face income-related Medicare price adjustments. These adjustments can range from $69.90 to as much as $419.30 more per month depending on your income.
4. Reduced Social Security Benefits
If you haven’t yet reached the full retirement age of 67 but you’re already collecting Social Security benefits, earning extra income in addition to your benefits will result in reduced benefits. In 2024, the Social Security Administration will deduct $1 from your monthly benefit for every $2 you earn above $22,320. Meanwhile, if you reach full retirement age in 2024 but haven’t turned 67 yet, the administration will deduct $1 for every $3 earned above $59,520 until the month you turn 67. Those who have reached full retirement age or beyond are exempt from these deductions. So, the amount of extra money you earn above and beyond your benefits should be taken into consideration before taking on a post-retirement job.
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This article originally appeared on GOBankingRates.com: 4 Ways Unretiring Might Actually Cost You Money
