Unretirement is pretty much what it sounds like. It entails people who have retired returning to work on a full-time or part-time basis. The percentage of retirees going through unretirement is estimated to be around 25% to 30%. Unretirement can occur for a variety of reasons.

One reason is that some retirees miss working. According to David Conti, a certified retirement coach with RetireMentors, many of these people miss the sense of belonging that work brings them. This can be especially prevalent for those who don’t have many hobbies or interests to pursue in retirement.

Another common reason is financial. Some people don’t realize the financial strain that retirement can bring. Longer life expectancies can put a strain on retirement savings and many retirees decide they need to work at least part time to make ends meet.

Unretirement can have implications for your retirement and related financial issues.

Taxes

Unretiring will generally result in higher income and therefore higher income taxes. You will want to plan for these higher taxes. Planning steps can include:

• Adjusting your tax withholding to align with your increased income level.
• Contributing to an employer’s retirement plan or a self-employed retirement plan if applicable.
• Deferring Social Security benefits if you have not already claimed them.
• Planning around required minimum distributions (RMDs) if you are at or approaching the age when they must commence.

A retired couple reviewing their finances.

Social Security

If you unretire and already have claimed your Social Security benefits, the added income from working could reduce your benefit if you are younger than your full retirement age (FRA). For those born in 1960 or later, their FRA is 67. For those born prior to 1960 their FRA is reduced by two months for each year. For example, for someone born in 1957 their FRA is 66 years and six months.

For 2026, the earnings limit for anyone who has not reached their FRA is $24,480. For any earnings above that amount, their benefit will be reduced by $1 for every $2 of excess earnings. In the year in which they will reach their FRA, the earnings limit is $65,160, with a $1 reduction for every $3 of excess earnings. This goes away once they reach their FRA. Additionally, any money deducted will be added back to their monthly payment after they reach their FRA.

Note that income from pensions, annuities, any governmental or military benefits or investment income does not count as added income from working when calculating any benefit reduction.

In the event that your earnings during unretirement fall into your highest 35 years of lifetime earnings, this could serve to increase future Social Security benefits.

Medicare

If you are receiving Medicare benefits when you unretire, your added income could subject you to the IRMAA surcharge on Parts B and D. The surcharge comes into play two years after the higher income was earned. For example IRMAA penalties assessed in 2026 are based on income earned in 2024.

If your circumstances change you may be able to appeal the IRMAA surcharge.

In some cases, you may have the option of coverage under an employer’s health insurance. This might be in addition to your Medicare coverage, or, in some cases, you may opt to drop Medicare and switch to employer coverage. In the latter case, this can be very complicated. If you are considering this option, be sure to consult with a professional who understands all of the potential ramifications to help you make the best choice for your situation.

Retirement plans

Your earnings may allow you to delay tapping into your retirement plan balances, allowing the account balances to continue to grow tax-deferred, or tax-free in the case of any Roth accounts.

Additionally, you might also find that you are eligible to contribute to a workplace retirement plan, or if you are self-employed to a self-employed retirement plan. If you can afford to contribute, this will add to the amount available when you do finally retire, or at least scale back your working hours.

If you are otherwise required to take your RMDs, you may be able to defer RMDs on your balance in your current employer’s 401(k) or other eligible plan if you do not own 5% or more of the company, and the employer offers this deferral option as a plan option. RMDs must be taken from other accounts subject to RMDs outside of the plan, and any RMDs that are deferred will be added to future RMDs once you leave this employer.

Related: Americans get blunt message on early retirement