More and more retirement-aged people are returning to the work force, either looking for a new challenge or seeking a more active social life. Is it worth it financially?
For years, Marie-Andrée Boucher worked at a stressful job. She had to go into the office every day and sometimes travelled out of the country. When the pandemic hit, she realized she no longer wanted that kind of lifestyle. She decided to retire at 65, right in the middle of lockdown.
Once she retired, however, she found she missed the social interaction. “I was still in great health, so I started looking at job postings,” she says. She found a stimulating job opportunity that dovetailed with her skills. She applied, with low expectations, and landed the job. "It was very validating to have been chosen. It shows that just because you’re older doesn't mean you can't do it," she says.
Since then, she’s been working full-time, mainly from home. She loves her new social life and the challenges of her work. She also appreciates the financial security that comes from having an additional source of income. “My situation was a bit ‘borderline’ before. But not anymore. Returning to work put an end to my financial anxiety. I’ll keep on working as long as I can,” she adds.
As Sun Life advisors have observed, retired people are increasingly returning to the work force. Just like Marie-Andrée Boucher.
Reasons for going back to work include:
A good number of retirees who get back in the saddle are looking to improve their financial situation.
But does it actually pay to keep working after retirement? Most people don’t think so. They think all the extra income will taxed by governments. But that’s completely false. "It definitely pays to work after retirement. There’s no such thing as an income level that’s taxed at 100%,” says Christine Drolet, a financial planner based in Quebec City.
In fact, this myth was debunked by a recent report by the Research Chair in Taxation and Public Finance (RCTPF) at the Université de Sherbrooke. What may have been partly true before is no longer the case.
In recent years, governments have made several tax changes to benefit experienced workers:
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A study by the RCTPF looked at a single, 62-year-old retired female with $32,500 in income. The income came from a retirement fund and QPP benefits.
And the study describes many other examples. They all show that working after retirement doesn’t mean working “for the government.” You can calculate how much stays in your pocket using this tool from the Quebec Ministry of Finance.
Earning more income during retirement can have financial consequences. It’s a good time to:
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