Career Corner: A Monthly Executive Search Firm News Article Series.
February 1st, 2009
As 401(k) plans have been drained in a matter of months, retirees or soon-to-be retirees are re-evaluating their retirement date. Individuals who were looking to retire within the next decade are now faced with depleted 401(k) accounts and no financial security for their retirement. Many employees have worked their whole career with one company banking on the assumption of a well earned retirement, and these retirees are now faced with an empty account and a new challenge. Fortunately employers are willing to hire retirees due to their work experience and expertise in specific markets.
The laws and regulations regarding rehiring retirees are constantly being re-evaluated and considered for revision depending on the agency. Rehiring retirees may adhere to different rules if they are in the education, federal, or corporate district of the workplace. Some agencies may not allow their rehired retiree to work full time or receive benefits, which can be seen as a financial incentive for hiring authorities. Other companies do not allow rehiring retirees at all, but we are seeing a trend in these companies re-evaluating those regulations in order to comply with the irreplaceable contributions of the retiree within the organization. Restrictions on rehiring retirees are in place for some organizations based on budgets and regulations. However, the controversy arises when retirees are receiving two checks, their annuity and their paycheck, however, most institutions stop contributing to retirement accounts once the official retirement has taken place.
Many individuals believe they will work after retiring or even plan on continuing to work without retiring. In a culture that values accomplishment, independence, and success, retirement can be seen in a negative light and spur workers to pick up new careers or jobs after retirement. Many companies match retirees with part time work or side projects specifically designed for re-hired retirees. If working for a city, there may be a time constraint before you can reapply for a job after retiring, and it is possible to be hired in a different job position within the organization. Many organizations are hiring retirees as outside consultants to offer their expert opinions on crucial matters facing the organization. When hired as independent consultants, retirees are not limited to pay and work hour limitations. Phased retirements are gaining popularity in human resource departments allowing potential retirees to work part time wile having partial access to their retirement accounts. This also contributes to a smooth transition for the retiree into a dramatically different lifestyle with less dependence on work relationships and responsibilities.
Many companies will work out retirement plans individually with retirees addressing part time work, job sharing, consulting, and special assignments. Retirees should reflect on what they want their life to look like during retirement, how much income they predict to need, and how the loss of work will affect them emotionally. There is no clear line on the regulations regarding re-hiring retirees, but if you are approaching retirement, be sure to investigate your companies procedures and retirement options.