If you're toying with the idea of working in retirement, you're in good company. Workforce participation among people 75 and older will increase 96.5% by 2030, according to Bureau of Labor Statistics projections.

Working at least part-time during retirement can boost your financial security and help you stay active. But it may not be how you envisioned your golden years. Consider these pros and cons if you're trying to decide whether a job should be part of your retirement plan.

Person at a desk working on a laptop.

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Why you might want to work in retirement

Working when you're retired can help you alleviate boredom and isolation, but let's face it: That paycheck is the primary driver. Here are some financial benefits of working in retirement.

1. You'll rely less on your investments

A bear market can be devastating for retirees and workers approaching retirement. If a prolonged downturn would wreak havoc on your retirement, consider working at least part-time. You'll diversify your income, making you less reliant on your investments and Social Security. If the market crashes, you can limit your withdrawals from your retirement accounts, giving your portfolio more time to recover.

Another advantage: In most circumstances, you can avoid required minimum distributions (RMDs) from workplace retirement accounts if you're still working, regardless of your age. However, this doesn't apply to traditional IRAs. 

2. You can continue saving for retirement

If you're hoping to add money to your retirement accounts after you've retired, plan on getting a job or earning income through self-employment. To contribute to an individual retirement account (IRA), you need earned income, which is money you earn from working. And, of course, to contribute to a workplace account like a 401(k) or 403(b), you need an employer that offers one.

You'll also continue paying into Social Security. Because benefits are based on your 35 highest-income years, your benefits could get a boost if you replace some low-earning years with higher-earning ones.

3. Health coverage may be more affordable

If you're thinking of retiring before you turn 65 and become eligible for Medicare, you may want to consider working enough to maintain employer-covered health insurance. Under the Affordable Care Act, most companies are required to offer health insurance to employees who work more than 30 hours a week, but some offer coverage to those who work even fewer hours.

Even after you become eligible for Medicare, maintaining a job with health benefits could make sense. In some circumstances, you can delay Medicare Part B and Part D if you have employer-sponsored coverage. Because the rules are complex, you'd want to consult with your company's benefits department. 

Why working in retirement could be a terrible idea

Working in retirement can make you more financially secure, but it has plenty of drawbacks. Here are some reasons to reconsider.

1. Your Social Security checks may shrink

If you're planning on working while collecting Social Security early, think twice. When your income exceeds certain thresholds, Uncle Sam temporarily reduces your benefit.

Social Security recipients who won't reach full retirement age (67 for those born after 1959) will have their benefits reduced by $1 for every $2 they earn above $21,240 in 2023. Those who reach full retirement age in 2023 will have $1 withheld for every $3 they earn above $56,520, though you can keep your full benefit once you turn 67. However, you'll eventually get the money back through higher checks once you reach full retirement age.

You could also lose some of your Social Security check to taxes. Up to 50% of your benefit is taxable for individuals with incomes between $25,000 to $34,000, or married couples bringing home $32,000 to $44,000. And up to 85% of Social Security benefits are taxable when your income is above these ranges.

2. Work can interfere with your quality of life

If you've diligently worked and saved for retirement for decades, you may be ready to bow out of the workforce for good. Being tied to a job can stop you from enjoying travel, time with family, or lazy days on the golf course. Or if you have health problems, you may find that working is difficult, if not impossible.

Should you plan to work in retirement?

Most people should aim to replace 70% to 80% of their income in retirement. That can come from a combination of investment income, Social Security, and, possibly, a job. If you can't stomach the idea of working some during retirement, a better solution may be to delay retirement by a couple of years.

Doing so can give your investments extra time to grow, help you hold out for a bigger Social Security benefit, and shorten the amount of time you need to make your nest egg last. Then you'll have more flexibility to pursue the carefree retirement you envisioned.