Many retirees plan on working in retirement.  Reemployment risk is the inability to supplement retirement income with employment due to tight job markets, poor health, and/or caregiving responsibilities.

For example, let's say someone intended to start a small business in eBay sales, video transfer or woodworking to supplement Social Security.  A physical ailment, such as a stroke, or a cognitive impairment, such as dementia, could easily impede their ability to follow through with this plan.

A 2013 survey from the Employee Benefit Research Institute found that 69% of workers planned to work for pay in retirement, but only 25% or retirees reported actually doing so.  In a similar 2010 survey, almost all retirees who did work for pay in retirement gave a positive reason for doing so, saying they worked because they wanted to stay active and involved (92%) or enjoyed working (86%), and 90% identified at least one financial reason for working in retirement.  These included

• wanting to buy extras (72%)
• a decrease in the value of savings or investments (62%)
• needing money to make ends meet (59%)
• keeping health insurance or other benefits (40%)

Many retirees have an informal phased retirement by taking consulting positions, part-time jobs or turning hobbies into profitmaking activities.  Working part-time may result in a reduction in pay but with increased job satisfaction.

¹ Retirement Risk Solutions, David Littell, The American College of Financial Services, 2017.