Are you coming out of retirement? 3 hidden costs you may encounter.

Retirement is a time of life that many people look forward to. And some people save very aggressively to get there early.

But frankly, retirement isn’t for everyone. Many people find themselves bored and unfulfilled once they are out of a job. And so you might decide to go back to work after you retire, even if you’re doing well financially.

But while going back to work might be a good thing for you — mentally, physically and financially — there are some less obvious costs you might encounter. 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 in itself is a given. But remember: earning more money can put you in a higher tax bracket. It could also make your Social Security benefits subject to taxes.

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

2. Higher Medicare premiums

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

Returning to work and substantially increasing your income could result in higher Medicare Part B costs. And Part D drug plans may also be subject to IRMAA.

3. Travel, food and wardrobe expenses

Returning to work after retirement could mean spending more money on gas, tolls and parking. And that’s not all. You may get a discount on your car insurance because of minimal driving. If this changes because you commute daily, your car insurance premiums could go up.

Plus, going back to work might mean spending more on meals — because while you have the option of packing your lunch from home, it can be hard to say no when your coworkers ask you to join them at a coffee shop local several times a week. . And you may need to spend more on clothing depending on the type of work you do.

Returning to work as a retiree can benefit you in many ways. But it’s important to be aware of the surprising costs that could result. Write down the numbers carefully so that going back to work is a positive thing for your finances overall.

And if necessary, consider meeting with a tax or accounting professional to review the impact of retirement on your overall finances. They may have some suggestions that can help you enjoy your job-related income while minimizing the disadvantages mentioned above.