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Retirement can be a very exciting time for many people. For some, it can be a time to relax. For others, it can be a chance to travel the world.

Regardless of motive, most people look forward to the day of their retirement. But what happens if you have to unretire and return to the workforce?

Eric Paynther, second vice president for New York Community Bank in Cleveland, and Lisa Rosenthal, financial adviser for Merrill Lynch Wealth Management in Pepper Pike, said there are a few reasons why a person might have to leave retirement.

Rosenthal said she finds people approach retirement in different directions and in different ways. Sometimes they feel that they have reached a point where they’re ready to step back because they’re tired or something related – like the stress of COVID-19 – has made them reassess things. This could be something such as wanting to be with family or having other priorities.

And there could be a different reasons why somebody might want to leave retirement, she said.

It could be something as simple as being bored in retirement. It could also be that their financial situation has taken a reversal and they are spending more than they expected to. They might also need insurance they did not expect to need.

Paynther said a good rule of thumb is to have investments or savings combined with Social Security, plus any possible pension, to generate about 60% to 70% of your pre-retirement take-home income.

“Not everyone is the same,” Paynther said. “Each picture is a little bit different. Some people have different spending habits, of course. So, if they’re looking to downsize or travel more, that can lead to either more or less than they would need to go out and have.”

He said people may need to leave retirement when they either underestimate how much they will spend or if unexpected expenses can pop up.

“You have to have realistic lifestyle expectations,” Paynther said. “If it’s unrealistic, then that’s going to cause you to go ahead and go back into the work environment. Also, you have to have some type of emergency fund for the unexpected or expected expenses. You might also have family or extended family or friends that may need financial assistance from you. It can cause you to have to go ahead and re-enter the workforce again.”

Rosenthal recommended people prepare ahead of time. They should take the time to think through the emotional component of retirement, as well as the financial component. She said creating a financial plan is imperative.

“It’s not just adding up the numbers, like asking whether what you’re spending is less than what you’re generating in income,” Rosenthal said. “There’s a bigger component to that down the road. How much (do) you anticipate that you’re going to spend? What are your health care costs going to be? Can you afford increasing health care costs? Can you afford long-term care? These things can wipe out your financial situation pretty quickly.”

Rosenthal said if you’re not prepared and haven’t thought this through, there could be devastating consequences.

“We recommend clients sit down with their financial adviser, discuss all the components in their life and create a financial plan that would prepare them, help them transition into retirement and carry them through retirement,” Rosenthal said. “And it gives clients a good benchmark. Are they spending what they said that they were going to spend? Are they staying on track? It’s a good way to keep your eye on the ball.”

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