Back to Work

Retirement isn’t always the finish line it’s cracked up to be. If you’re retired, approaching retirement, or just wondering whether “unretiring” could ever make sense, here’s a candid look at the trade-offs: the hidden trap of the ACA earnings cliff, the pros and cons of part-time work post-retirement, and the surprising value of keeping old bridges intact.

Some people retire and never look back. Others discover after a while that retirement is not what they imagined, and so choose to ‘unretire’ and go back to work.

In my case, none of those situations applied, but after some time being retired, I still took on a part-time job as a software developer. I wasn’t bored or disillusioned with my retirement at all. When the job opportunity came along, I was drifting away from tech and towards my music hobby (which admittedly still involves a lot of tech…), especially playing drums. I wasn’t hurting for money, though I admit there are a few things that I perhaps would like to buy but didn’t because I couldn’t justify the cost.

So why did I take the job? Good question. Basically, the opportunity that fell into my lap just seemed too sensible to pass up. The job was part-time work-from-home with the same small company I worked for almost 20 years ago. So I already knew and liked the people that I’d be working with. I would be working on some of the same software that I helped write 20 years ago. While the software was hardly what I would call ‘modern’, it was still interesting to me. I figured that I might as well get paid for working with interesting software instead of just playing with interesting software for free. And having some extra spending money to blow on new tech would be nice too.

When deciding whether to take the job offer, I worried that I would be the sole person supporting and enhancing a large amount of code. It seemed like there was enough work to do with that code to keep a full-time developer busy, but I did not want to go back to work full-time. For a while, I thought I would have to turn down the opportunity. But then I decided that I could use AI to increase my productivity to the point where I could do the work that needed to be done while still only working part-time. If it hadn’t been for the AI explorations that I have been doing recently, which taught me how to use AI to increase my coding productivity, I would not have taken the job.

Another factor, I will admit, is that I felt that I was ’needed’ for this job. From my employers’ perspective, it probably would not be easy to find a new developer to come in and take over a big pile of old, somewhat niche software that used distinctly out-of-fashion frameworks and technologies. I was a known quantity who would get up to speed relatively quickly because I knew the frameworks and the software itself (at least the state it was in 20 years ago). And my part-time pay demands were not excessive.

So, I liked that my experience in older technologies was actually still worth something. It is nice to feel needed.

So that is how I joined the ranks of the unretired.

How Often Does Unretiring Happen?

More often than people sometimes assume. Some statistics pages (gathered by AI) on the topic are:

• AARP: Find Out Why More Retirees Are Returning to Work - this article says some experts think many of the 2.4 million extra people who retired during the pandemic are now returning to work.

• Pew Research: Working After Retirement - contains a wealth of interesting statistics.

• EBRI: Retirement Confidence Survey - the Retirement Confidence Survey is a long-running source for retirement statistics and expectations, including how often retirement happens earlier or later than planned.

According to the Pew Research article, the majority of unretirees are working part-time. Once you have crossed the retirement threshold, it would be hard to go back into a full-time grind unless you are forced to do so. More likely, you want a smaller role with fewer headaches and less pressure.

The ACA Earnings Cliff

If you are under age 65, there is, unfortunately, a practical catch that can make going back to work part-time complicated: the ACA earnings cliff.

Since I was still under age 65 when I retired, I got my health insurance via an Affordable Care Act (ACA) plan through healthcare.gov. Because my income during retirement was low, the insurance premiums for my plan were very inexpensive because the government subsidized the plans – I only paid a small part of the insurance premium, and the government picked up the rest through ‘premium tax credits’. Without the subsidies, the plan that I’m on would be very costly, to the tune of about $30,000 per year. And, since I was only willing to go back to work part-time, the employer would not cover my insurance costs (no employer would do that for part-time workers as far as I know).

The subsidies that made my health plan affordable decrease as you earn more income during retirement, which makes sense to me. But due to some strange politics and policies, the ‘curve’ by which these subsidies decrease as retirement income increases is not smooth – it has a sharp cutoff at an income equal to four times the federal poverty threshold. If you earn even $1 over that cutoff, your health insurance costs increase drastically because the subsidy disappears. In my case, if I were to go over that limit, I would actually lose money by working my part-time job – the extra income I made from working would not cover the increased health insurance costs! This is the part that feels wrong to me.

Some (AI gathered) links discussing ACA and the cliff:

• HealthCare.gov: Saving money on health insurance - this explains how premium tax credits change when your income changes, and what happens when your household income is too high for the credit.

• IRS: The Premium Tax Credit - The basics - the IRS notes the older 400% of federal poverty line rule and the temporary rule changes that affected eligibility.

So if you are retired but thinking about going back to work, the right question is not just, “What does the job pay?” It is also, “What does the job do to my taxes, my marketplace subsidies, and any other benefits I am leaning on?” If you do not ask that second question, you can fool yourself into thinking you found a great little part-time gig when you actually found a net loss.

Pros and Cons of a Part-Time Job in Retirement

A part-time job after retirement can be attractive for reasons that are not just financial.

It can give you structure without taking over your life. It can give you some social contact without obligating you to spend all day in meetings. It can let you use a skill set that might otherwise sit idle.

Even though the circumstances around my unretiring were almost ideal, there are still some downsides:

• I found I didn’t have the mental energy to continue with my music hobby at the same intensity level. I decided to hit pause on my drum lessons for a while until I got up to speed with the job. I felt I wasn’t getting my money’s worth from the lessons unless I could get in more quality practice time each week.

• Getting up to speed on a large codebase so that I could be productive was a bit stressful. I was literally losing sleep because I was thinking about the code and what I would do or try the next day. That sounds worse than it was: thinking about work has been keeping me from getting sleep for all my working life, so I’m used to it. But retirement gave me a taste of what it was like to not lose sleep for that reason, so I noticed it more.

• I now worry a bit more about finances, mostly because of the ACA cliff. The thought that I might end up on the wrong side of the cliff because of my part-time income really bothers me. While I do have some control over how much I work at the part-time job, a good portion of my income (as far as ACA premiums are concerned) will come from investment dividends and interest, which are variable and difficult to control.

• As is to be expected with any software development job, there are the occasional days where I feel I’m not getting things done quickly enough or thoroughly enough, or I discover I’ve taken a wrong turn on some coding. It is all too easy during those bad days to ask yourself “why am I doing this, again?”

But on balance, for now at least I am enjoying the job, and I am grateful that it came my way.

In Retired or Not?, I wrote about starting my retirement as a result of being laid off. That was decidedly unpleasant, and it was the first time in my career that it wasn’t my idea to leave a job. Every other time that I left a previous job, I left on good terms, several times continuing to do part-time support work after leaving. That is what ‘paid off’ for me to get this part-time gig. You never know when an old boss, an old coworker, or an old company may seek you out for a new job. So if you are still working, don’t burn those bridges.