Retirement Planning
February 1, 2023

Retirement Part 5: Unretirement

What if the worst happens and you need to exit retirement completely in order to make ends meet?
Stewart Willis

Retirement failure isn’t something anyone wants to think about, but if it happens to you, you could find yourself looking for work as an aged-out senior with few options. In earlier blogs in this series, I’ve mentioned that the clients who worry me the most aren’t the mid-to-low income people who saved diligently throughout their careers. Rather, it’s the high earners who haven’t saved a great deal but are in the habit of spending heavily.

The former client is more likely to have a successful retirement because they are already used to spending within their means. The latter, by comparison, doesn’t have a problem spending lots of money, because they are making lots of money. But if they don’t curtail their spending in retirement, it could mean disaster for their financial future. 

Failure to account for drops in income can happen to anyone. We’ve seen clients making a good living and spending accordingly, who found it incredibly difficult to cut back when their income dropped significantly. That’s important: We become immune to the impact of increased spending to maintain our lifestyle. 

Even someone who grew up having to watch every penny can suddenly find themselves spending hundreds per day to maintain their lifestyle. Cash outlays that would have astonished their younger self don’t even register today. 

As long as their income can support it, they won’t see any negative consequences from their spending. But as soon as that income drops, whether through job loss, pay cuts or retirement, they must limit their spending or risk running out of money.

Once you reach the point where you must exit retirement and re-enter the workforce, you will quickly realize there are many obstacles which did not exist before your retirement.

Becoming Re-employed

First, finding a job will likely be very difficult. Returning to the workforce as a senior citizen means you face an uphill battle when it comes to your age, but also your own skill set — or lack thereof.

Frequently, people trying to re-enter the workforce discover that technology and techniques have changed since they left years earlier. They find themselves hopelessly “behind the times” and often must settle for a job making much less money than the one they left when they retired.

Penalties for Earning Too Much

Assuming you find a job, you will also find that retirees earning income often pay penalties for doing so. Part 4 of the Retirement series goes more in-depth about the tax penalties and Medicare premium increases you may face if you earn too much after you retire.

Remember that once you are retired and are over age 72, you must take minimum distributions from your tax-deferred retirement accounts whether you need them or not, and those distributions count as income. Adding that income to what you make in your new job can easily subject you to tax and premium penalties. 

Emotional Difficulties

Beyond financial concerns, from a mental health perspective, unretiring is often a horrible prospect. You worked your whole life, looking forward to your permanent vacation, and now it’s cut short. Most of us are used to a certain malaise when returning from a week or two of vacation. Imagine the feeling of returning from a vacation that lasted years before it ended prematurely!

Re-entering the workforce after expecting to stay retired for the rest of your life is going to be unpleasant! That’s why it’s absolutely vital that you maximize your chances for a successful retirement.

Start preparing early. Don’t expect to retire and suddenly cut your spending “cold turkey.” Slowly wean yourself off high spending several years before your retirement date. Your goal should be to bring down your spending to avoid draining your nest egg too quickly in retirement. 

If you do find yourself in retirement and spending more than your retirement accounts can support, be sure you take the appropriate corrective action. Don’t panic! Some retirees who think they’re on track to run out of money want to shift their retirement accounts into riskier assets with higher potential returns, thinking that will make them enough money to support their spending.

Even if those higher-yield investments do make money, it may take years or even decades for them to gain enough to impact your retirement, and they may lose value in the interim. If that happens, it will put your retirement assets at further risk because unlike someone many years from retirement, retirees do not always have the luxury of waiting for their investments to recover before they need to draw on them.

Avoiding unretirement, and reacting appropriately when your spending is excessive, is something your financial advisor can help you with. At Asset Preservation Wealth & Tax, we regularly help our clients get their retirement back on track. The conversations aren’t always enjoyable, but they’re important to have. If you feel you may be faced with the prospect of unretirement, it’s important to work with your financial advisor without delay.

Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to and search by our firm name or by our CRD # 175083.

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