'Unretiring' retirees

It could be called 'unretiring' if there were such a word. This is the practice of retirees making a decision to return to work.


Financial needs, medical advances and greater longevity are among the most obvious reasons why some retirees decide to try to make a comeback to the paid workforce. Another reason is that a retirement lifestyle may not prove as satisfying as perhaps envisaged.

In the depths of the GFC, such publications as Money Magazine in the US and Forbes magazine published articles about retirees returning to the workforce mainly to rebuild their then diminished nest eggs.

And long after the GFC, tens of thousands of Australian retirees clearly recognise the potential benefits, financial and non-financial, of an extended working life.

One of the most efficient ways to stretch retirement savings is to return to work (or to postpone retirement for a few years). By remaining at work, individuals have an opportunity to save more for what will be a shorter and therefore less costly retirement. Further, they do not have to draw down on their retirement savings as soon.

The Australian Bureau of Statistics has calculated the number of Australians who had fully retired but have since either returned to work or are planning to look for work.

Based on its 2012-13 Multipurpose Household Survey, the ABS reports that 191,200 retirees over 45 fell into in this category at the time of the survey.

The biggest reasons for coming out of retirement (or at least wanting to) are "financial need" (42 per cent) and feeling "bored or needing something to do" (30 per cent).

In practice, thinking about re-entering the workforce and actually succeeding in getting a satisfactory job can be two different things.

Generally speaking, people still in the workforce should find it easier to extend their working lives by several years than retirees attempting to "unretire".

A personal finance article in The New York Times this month - headed After years out of a job, older workers find a way back in - examines the challenges of people in their fifties and sixties finding a place back in the workforce.

The article quotes various human resources and career specialists about the importance of would-be older workers updating their skills, including technical skills, documenting those skills and then practising effective networking in their pursuit of a job.

Any decisions by retirees to try to return to work depends, of course, on such personal circumstances as the state of their health, availability of suitable employment and the adequacy of their retirement savings.


By Robin Bowerman
Smart Investing 
Principal & Head of Retail, Vanguard Investments Australia
12 November 2015