Overview
This episode explores the growing trend of Canadians working during retirement, the motivations behind it, and the financial, tax, and lifestyle considerations involved. Key advice and real-life examples highlight how to balance earning extra income with enjoying retirement.
Reasons Retirees Continue Working
- Financial necessity due to rising expenses, housing costs, health care, or supporting family.
- Desire for structure, purpose, engagement, and community connection after leaving a primary career.
- Examples include part-time jobs, consulting, teaching, volunteering, or entirely new hobbies for enjoyment.
Financial Implications of Working in Retirement
- All employment income, including from consulting and side hustles, is taxable and may raise your tax bracket.
- Earning over $91,000 (2025) could trigger partial Old Age Security (OAS) clawbacks.
- Even small additional income can reduce Guaranteed Income Supplement (GIS) eligibility.
- Retirees under 70 may opt to continue Canada Pension Plan (CPP) contributions for a permanent postretirement benefit.
- Part-time work may allow delaying withdrawals from RRIF or deferring CPP/OAS, supporting investment growth.
Real-Life Case Examples
- Laura (68): Mentors and teaches for modest income, valuing engagement over money.
- Tom (80): Freelance consulting provides social interaction and flexibility.
- Jackie (48): Chooses contract work in winter to fund travel, maintaining independence from investments.
- Mary (78): Active volunteer, finds purpose and fulfillment without earning income.
Five Practical Considerations Before Working in Retirement
- Know your limits: Set clear time and energy boundaries to prevent overcommitment or burnout.
- Understand the tax impact: Plan for higher taxes, potential OAS/GIS impacts, and seek advice to optimize.
- Keep it flexible: Favor roles allowing you to adjust or exit as needed, prioritizing personal freedom.
- Make it meaningful: Choose work that energizes you or aligns with your interests.
- Budget for business: Track income/expenses, manage tax filings, understand contracts, and treat freelance work professionally.
Emotional and Lifestyle Aspects
- Stopping work may cause identity loss, loneliness, or boredom; working can restore structure and meaning.
- Each retiree must assess if working adds value or detracts from their desired retirement experience.
- Flexibility and self-direction are emphasized over reverting to pre-retirement routines.
Recommendations / Advice
- Consult financial and tax professionals before accepting work in retirement.
- Integrate all income sources into your retirement financial plan.
- Regularly reassess work commitments to ensure they continue supporting your retirement goals.
Questions / Follow-Ups
- Download the provided cheat sheet to evaluate if retirement work fits your situation.
- Consider upcoming episode topics, such as housing choices in retirement.