Reemployment Risk

Posted December 1, 2025, By Cole Ferrier

Key Takeaways:

• Reemployment Risk is the danger that you will be unable to find suitable work in retirement to supplement your income, either by choice or by necessity.

• There is a massive gap between expectation and reality: while the vast majority of pre-retirees expect to work, fewer than a third of actual retirees do.

• The primary barriers to reemployment for older adults are often ageism, atrophied skills, personal health limitations, or caregiving responsibilities for a spouse.

• The best way to mitigate this risk is to treat your career as a lifelong asset, continuously investing in your skills and actively maintaining your professional network long before you plan to retire.

In our last article, we confronted the jarring reality of Forced Retirement Risk—the high probability that your career timeline might be cut short. For many, the immediate psychological and financial "Plan B" is simple: "I'll just get another, less stressful job to bridge the gap." The idea of working in retirement has become a central assumption in millions of financial plans, seen as a way to stay active, engaged, and, most importantly, solvent.

But what if that backup plan fails to launch? What if the doors to the workforce, once you've stepped through them, are harder to re-enter than you ever imagined? This is Reemployment Risk.

From my engineering background, I see this as a failure of a critical backup system. In any well-designed piece of software, if the primary process fails, a secondary or "failover" process is supposed to kick in seamlessly. But if that backup system hasn't been maintained, updated, and tested, it may fail to initialize when called upon, leading to a total system crash. Relying on the ability to work in retirement without actively preparing for it is a dangerously flawed design.

By the Numbers

• 79% vs. 29%: The stark gap between expectation and reality. In 2017, 79% of workers reported they expected to work for pay in retirement, while only 29% of actual retirees reported they were doing so. (Source: Employee Benefit Research Institute, "2017 Retirement Confidence Survey")

• 31%: The percentage of working retirees who were able to stay with the same employer, often in a phased or part-time capacity. The majority had to find a new job or become self-employed. (Source: "Phased Retirement–An Important Part of The Evolving Retirement Scene," Benefits Quarterly, 2009)

• 42%: Among retirees who work for pay, the percentage who say they do so out of financial necessity ("needing money to make ends meet"). (Source: Employee Benefit Research Institute, "2017 Retirement Confidence Survey")

From the Case Files

Meet Robert, a 63-year-old accountant who took an early retirement package. His plan was to take a year off and then launch a part-time tax consulting practice for small businesses to supplement his income until he claimed Social Security at 70. But in the three years since he'd last looked for clients, the world had changed. The tax software small businesses now used was cloud-based and automated many of the tasks he specialized in. His professional network had moved on, and his old contacts were now retiring themselves. He found that the consulting gigs he could land paid far less than he'd projected, and he struggled to compete with younger accountants fluent in the latest digital tools. His "Plan B" failed to generate the income he'd counted on, forcing him to claim Social Security years earlier than he wanted to.

Understanding the Risk: The Obstacles to an Encore Career

Reemployment risk is the inability to supplement your retirement income with employment due to a tight job market, poor health, caregiving responsibilities, or a mismatch in skills. It’s the danger that your "human capital"—your ability to earn an income—is less durable than you assumed.

For older adults, the primary drivers of this risk are:

1. Skills Obsolescence: Technology and business practices evolve rapidly. Skills that were valuable five years ago may be table stakes or even obsolete today.

2. Ageism: While illegal, discrimination based on age is a real and pervasive barrier in the hiring process.

3. Health and Energy Levels: The desire to work and the physical and mental capacity to do so can diverge. A chronic health condition can make even a part-time schedule difficult to maintain.

4. Caregiving Needs: The need to care for an ailing spouse or parent is a common reason retirees who want to work find that they cannot.

The Impact on Your Plan: The Backup Generator Fails

When your planned-for retirement income fails to materialize, the strain on your primary financial resources intensifies significantly.

• Direct Consequence of Forced Retirement Risk: Reemployment risk is often the second punch after the first blow of a forced retirement. You're pushed out of your career job unexpectedly, and then discover that re-entry is far harder than you imagined.

• Interaction with Longevity and Inflation Risk: The failure of the "work in retirement" plan means your investment portfolio must now bear the full burden of funding a long, inflationary retirement. This amplifies Excess Withdrawal Risk and Sequence of Returns Risk, as you are forced to draw down your capital more aggressively and for a longer period.

• Psychological Impact: Beyond the financial strain, the inability to find meaningful work can lead to a loss of purpose, social connection, and identity, which can have significant impacts on mental and emotional well-being in retirement.

Solutions & Your Risk Mitigation Toolkit

You can't assume the job market will welcome you with open arms in your late 60s. The key to mitigating reemployment risk is to make yourself as resilient and adaptable as possible, long before you need the job.

• Tool #1: Lifelong Learning & Skill Maintenance. Your skills are an asset; treat them that way. Don't let them depreciate. Actively invest in staying current with your industry's technology, trends, and certifications.

• Tool #2: Active Network Maintenance. Your professional network is one of your most valuable assets. Don't let it go dormant. Stay in touch with former colleagues, remain active in professional organizations, and use platforms like LinkedIn to maintain connections. You need to keep the lines of communication open before you need to ask for a referral.

• Tool #3: Realistic Financial Modeling. Don't build a financial plan that depends on a significant income from a future part-time job. Model your plan as if you will have zero work income. Then, run alternative scenarios with more optimistic but realistic assumptions. This ensures that any income you do earn is a welcome bonus that enhances your plan, not a critical component required to prevent its failure.

• Tool #4: Explore Flexible & Encore Careers. The world of work has changed. The "gig economy," remote consulting, and project-based work have created more opportunities for flexible arrangements that can be a perfect fit for a semi-retired professional. Organizations that connect retirees with non-profits can also provide a path to a fulfilling and paid "encore career."

A Resilient Framework for Your 'Plan B'

Strategically, reemployment risk is the danger that your "Plan B"—working to supplement your income in retirement—fails to launch. This exposes a critical vulnerability in any plan that was designed with the assumption that this backup income would be available. This dependency is fragile, easily broken by skills that have become obsolete, a professional network that has gone dormant, or health and family needs that make working impossible.

A resilient plan addresses this by treating any work income as a welcome bonus, not a core component. The primary strategy is to build a financial model that is sustainable without any reemployment income. To keep the option viable, however, the best approach is to continuously invest in your human capital by keeping skills current and actively maintaining your professional network, ensuring your 'Plan B' is as robust as possible if you choose to activate it.

Conclusion: The Great Balancing Act

The fundamental trade-off in managing reemployment risk is between investing in yourself and enjoying your leisure. It takes time and effort to learn new skills, attend industry events, and maintain a network. It’s easy to let those things slide as you approach retirement. But the "great balancing act" is recognizing that this work is an investment in your future flexibility and security. By sacrificing a small amount of leisure time today to keep your human capital strong, you buy yourself more options and a much more resilient "Plan B" for tomorrow.

Create Your Financial Compass with Us

Is "I'll just work longer" a core part of your retirement plan? Let's stress-test that assumption. We can help you build a flexible financial blueprint that prepares you for multiple scenarios and identifies the steps you need to take today to keep your options open for tomorrow. Contact us to start the conversation.

Resources:

• AARP Work and Retirement: Provides articles, tools for reimagining a new job or career, and job opportunities for older workers. (www.aarp.org/work/)

• CoGenerate: A non-profit focused on bridging generational gaps, offering resources and opportunities for experienced adults seeking social-impact "encore" careers. (cogenerate.org)