Retirement, once viewed as a definitive end to one’s working life, is increasingly becoming a flexible, fluid phase. A significant trend is emerging: “unretirement,” where individuals who have retired choose to re-enter the workforce. This phenomenon is not merely about financial necessity, although that’s a key driver; it’s a multifaceted movement reflecting evolving personal goals, economic realities, and societal shifts.
Statistics Canada shows that the population of 65 and over grew by 37% between 2015 and 2024. The portion of that same group that chose to continue working grew by 57%. This 20% surge of people working in that age group is a solid indicator of the unretirement movement. Why is this movement happening, and what does it mean for the retiree hopeful and the economy?
What is unretirement?
At its core, unretirement means leaving retirement to return to work, for whatever reason. While some may define “retirement” as a complete cessation of work for income, unretirement often involves a period of not working for income before returning. The concept also applies to those who initially planned a phased retirement but then increase their working hours, or even individuals who, though eligible for pensions, decide to continue working. The rise of unretirement is a clear indication that for many, retirement is no longer a permanent destination but a flexible stage of life.
Why are people unretiring?
Multiple factors are fueling the unretirement trend, affecting millions of retirees. The motivations for unretirement can be broadly categorized into financial and non-financial reasons.
Financial reasons
Rising costs: Inflation and the increasing cost of living are significant concerns. Many find their savings insufficient to maintain their quality of life, especially with less than half of Canadians having a workplace pension. A survey by the Healthcare of Ontario Pension Plan (HOOPP) in 2024 found that 26% of Canadians expect to work past regular retirement age to support themselves. The vast majority, 70%, cited the cost of living as a major concern when it came to retirement decisions. Income keeping up with inflation was the second-highest concern at 63%.
Insufficient retirement savings/benefits: If current income doesn’t cover basic needs, or if individuals are too young for the Canadian Pension Plan (CPP) and Old Age Security (OAS) or face early withdrawal penalties from their Registered Retirement Savings Plan (RRSP), working becomes a necessity. The HOOPP survey results support this idea in that they revealed that 45% of unretired men have not set aside any money for retirement in the previous year. Women fared even worse at 53%.
Life disruptions: Unexpected financial setbacks, such as a substantial increase in living expenses or a reduction in retirement income due, for example, to a stock market crash, or the need for expensive medical/long-term care for a dependent, can also necessitate unretirement.
Non-financial reasons
Purpose and social engagement: Retirement can lead to a void, often more social than financial. Many miss the social interaction that work provides. Finding a sense of purpose and combating boredom are strong motivators.
Mental and physical health benefits: Working later in life can provide a mental health boost, reducing dementia and improving emotional, cognitive, and mental well-being. It can also offer physical benefits, helping to manage weight and boost activity levels, and may even lead to living longer.
Longevity: People are living longer. The United Nations estimates global centenarians to reach 3.5 million by 2050. This extended lifespan means more years to fill, making continued work appealing for some.
How unretirement works and its benefits
Unretirement isn’t a one-size-fits-all approach. Individuals might return to their prior job (part-time or full-time), embark on an “encore career” building on existing expertise in a new direction, or strike out in an entirely new field. Many find self-employment options like driving for Uber or DoorDash, which didn’t exist years ago. Remote work is also a popular preference.
The benefits extend to both the individual and the broader economy:
Individual benefits: Besides increased income, unretirement can lead to employer-paid medical insurance, allow retirement savings to grow without withdrawals, and potentially increase future government benefits if delayed.
Benefits for employers/economy: Older workers bring a lifetime of experience and skills. They can help mitigate global skills shortages and fill senior roles that are hard to staff. Research suggests boomers are less prone to burnout and more loyal to employers, and intergenerational teams can foster stronger performance and collaboration. Older workers can also serve as valuable mentors to younger generations, providing a “win-win” for all involved.
Hidden costs and important considerations
While unretirement offers many advantages, there are potential financial and emotional drawbacks to consider:
Government benefits: Working past 60 means putting careful consideration into the Canadian Pension Plan (CPP). Those between the ages of 60 and 65 can continue to work while receiving CPP benefits, though they must continue to contribute to the plan. Those who do this will get more from it when they officially retire. At 65, things change again. It’s at this point that you can choose to stop contributing to CPP. The caveat being that choosing to continue to contribute means the employer must also.
Healthcare: While Canadians are blessed to have a robust healthcare system, there are still hefty costs associated with health issues. Giving these costs careful consideration before retiring is key to maintaining quality of life.
Taxes: Earning more money can push you into a higher tax bracket, affecting federal and provincial/territorial income taxes.
Emotional toll: Some may find themselves resenting the loss of freedom they enjoyed in retirement, or they might not have the same energy levels as before.
Making an informed decision
Given these complexities, it’s crucial to consult a financial advisor. An advisor can help you analyze your budget, understand the impact of returning to work on your government benefits and overall retirement plan, and find ways to lower your tax burden.
If you’re considering unretirement, be sure to:
- Audit your budget, expenses, and income to determine financial needs.
- Upskill and cultivate your network to improve job prospects.
- Address potential age discrimination by focusing on credentials and omitting college graduation dates from resumes.
- Consider semi-retirement, a gradual transition that allows you to work fewer hours while still enjoying leisure activities.
The unretirement trend reflects a dynamic evolution of how people approach their later years. Whether driven by financial necessity, a desire for purpose, or the social benefits of work, understanding the implications—both positive and negative—is key to making it a successful chapter in life.
If unmanageable debt is the cause of your unplanned unretirement, consider a free consultation with one of our Credit Counsellors. They will talk through your specific situation and then walk through debt relief options with you.
