Returning to work after retirement
For many Canadians, their retirement plans changed with the economy. Many saw their retirement savings portfolio shrink significantly. Now instead of planning for retirements, Canadians are beginning to worry about outliving their savings.
A poll by the Royal Bank of Canada showed 75 per cent of retired Canadians were not aware of how much money they spent in their first year of retirement. And for those who did know, just under half said it was more than expected.
There are many things to consider before exiting the workforce. While some older Canadians are planning to fully embrace the life retirement brings, there are others who find a complete break from work more difficult or no longer have the savings they anticipated. Scaling back hours or working part-time are becoming options.
And in some cases, it is not always about the money. According to the Statistics Canada, one-fifth of retired individuals had completed paid work after their retirement. The reasons were not all money driven. More than half of the people surveyed cited reasons other than financial for returning to the work force. Some said they did not like retirement while others enjoyed the rewards of working.
Retirees going back to work are not always returning to their previous jobs but instead look for new challenges for their skills.
If you have an employer pension plan, there may be restrictions on work after retirement in the collective agreement. Again, check your situation before taking a new job.
Your tax situation may be helped if you are able to take advantage of the pension income splitting option. This allows eligible pension income to be split with a spouse or common-law partner to help lower your tax payable.