Retirement is a period of life many people look forward to. And some people save super aggressively to get there early.

But frankly, retirement isn’t for everyone. A lot of people find themselves bored and unfulfilled once they’re no longer holding down a job. And so you may decide to go back to work after retiring even if you’re doing just fine financially.

But while returning to work could be a good thing for you — mentally, physically, and financially — there are a few less-obvious costs you might run into. Here are three you need to know about so you can plan accordingly.

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1. Higher taxes

The more money you make, the more taxes you’re likely to pay. That itself is a given. But remember: Earning more money could bump you into a higher tax bracket. It could also make it so your Social Security benefits are subject to taxes.

Seniors whose income mostly consists of Social Security can often avoid having their benefits taxed. But if you’re single and your combined income — which is your adjusted gross income plus tax-free interest income plus 50% of your annual Social Security benefit — reaches $25,000, taxes on benefits could start to apply.

2. Higher Medicare premiums

Medicare Part B charges a standard monthly premium for enrollees that can change from year to year. In 2024, the standard monthly Part B premium is $174.70. But higher earners are subject to income-related monthly adjustment amounts (IRMAAs) that are effectively surcharges on Part B, making those premiums more expensive.

If you go back to work and increase your income substantially, it could lead to higher Medicare Part B costs. And Part D drug plans can be subject to IRMAAs as well.

3. Commuting, food, and wardrobe expenses

Going back to work after retirement could result in more money being spent on gas, tolls, and parking. And that’s not all. It may be that you’re getting a discount on your auto insurance due to driving minimally. If that changes because you’re taking on a daily commute, your car insurance premiums could rise.

Plus, returning to work could mean spending more on meals — because while you have the option to pack a lunch from home, it can be hard to say no when your colleagues ask you to join them at a local cafe a few times a week. And you might also need to spend more on clothing, depending on the type of work you do.

Going back to work as a retiree could benefit you in many ways. But it’s important to be aware of the surprising costs that might ensue. Crunch the numbers carefully so that your return to work ends up being a positive thing for your finances overall.

And, if necessary, consider sitting down with a tax or accounting professional to review the impact of coming out of retirement on your finances as a whole. They may have some suggestions that can help you enjoy your job-related income while minimizing the aforementioned downsides.

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