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
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.