Sometimes in our lives, we need to take a break from working. This could be for caregiving, for mental well-being, for physical health, or for myriad other reasons.
Several times over the course of my career as a financial advisor, I have recommended that clients reenter the workforce due to a projected shortfall in retirement income.
The reasons for the shortfall will vary, but usually they are correlated with spending too much and not having enough money saved to maintain a person’s current lifestyle after retirement. This is a difficult conversation, but it is important, nevertheless.
Whatever the reason, returning to work after a period of absence can be daunting. Your days will be filled differently, and time may become more valuable.
Prior to taking the plunge, prepare yourself for this transition. Search for programs at your local college, or nonprofits that can assist you with preparing to reenter the workforce. Review your education and experience, but also identify your skills, interests, and strengths.
Remember that your skills and interests may have changed since you were last employed. Identify the type of work environment that is important to you.
Do you want to work remotely, or in an office with your colleagues?
Are you OK with traveling, or do you want to work locally?
Focusing on what you want from a new position and narrowing your job search to fit your criteria should help to maximize the opportunity for success.
Update your resume
Your resume is your first impression. It needs to be flawless. Update it to include additional skills you have obtained since you were last employed. Also, address your absence during the employment gap.
Your resume should be simple and personalized, focusing on quantifiable achievements and skills that align with the job description. Consider using AI tools to help formulate your resume, using high-impact keywords that are specific to your industry.
After your resume is complete but before sending it to any employers, ask a professional colleague to proofread the document for spelling, grammatical errors, flow, and presentation.
If necessary, you can go into more depth using a cover letter. This is a good place to explain your absence from the workforce and anything you’ve done during that time that relates to the position you’re applying for and makes you a more attractive candidate.
Prepare for an interview
During an interview, you are being evaluated to determine if you are the best candidate for the job. Prepare for the interview well in advance.
Research the company that is interviewing you so you can answer questions with informed responses. Understand the job description so your responses align with what the company is seeking in a candidate.
Once you are prepared, enlist the help of a trusted friend or family member and practice interviewing. Are you listening to the questions and answering with detailed quantifiable answers? Ask your interviewer for feedback. What can you improve to make the best impression possible?
Before your interview, select an outfit that is appropriate for the culture of the company and the position you are applying for. Research the company’s website or visit their location to observe how employees dress when they are at work.
Expectations will be different in a casual, small business vs. a corporate environment. Choose clothes that are comfortable, well-fitted, clean, and wrinkle-free to help make a great first impression.
During the interview
Arrive early with copies of your resume in hand. Be honest and confident about the value you can bring to your potential employer.
Listen to the questions they ask and illustrate how you meet the requirements of the job with examples of past experiences. Make it clear that you’re ready to learn and to do what it takes to catch up on what you might have missed throughout the period when you were not employed.
Be prepared to ask smart questions, such as: how would you describe the characteristics of someone who is successful in this job? What are the day-to-day responsibilities? What does collaboration look like at this company?
After the interview
Set yourself apart by following up after the interview to thank the interviewer for their time by sending a personal, handwritten thank-you note. This small act can leave a big impression.
Once You Are Employed
Starting a new job usually comes with benefits that will help improve your financial wellness. In addition to the new income, you may have the opportunity to receive healthcare or retirement plan benefits. Spend some time exploring what that means for you.
Your monthly finances could shift dramatically, depending on your new income, health insurance benefits, and retirement plan contributions. It’s a wise idea to pencil out a new budget based on your net income after the cost of these benefits has been deducted from your paycheck.
Before the new income is incorporated into your everyday spending, consider using your new budget as an opportunity to pay off debt and plan for your future. Budgeting and planning are key to financial success.
Retirement contributions
The 2025 annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is $23,500. Meaning: You can contribute this amount (and more if you are over age 50) to your retirement plan, pre-tax.
The catch-up contribution limit that applies to employees ages 50 and over is $7,500. Therefore, participants who are 50 and older can contribute up to $31,000 each year to their retirement plans.
Under a change made in the SECURE 2.0 Act, a higher catch-up contribution limit applies for employees aged 60, 61, 62, and 63 who participate in these plans. This year, the higher catch-up contribution limit is $11,250 instead of $7,500.Social Security
If you are collecting Social Security benefits when you reenter the workplace, are younger than full retirement age, and are making more earned income than the yearly limit of $23,400, the Social Security Administration will reduce your monthly benefit until you reach full retirement age. Your benefits will be reduced by $1 for every $2 you earn above the limit.
The amount that your benefits are reduced, however, is not lost. Once you reach full retirement age, you will receive credit for your reduced benefits. Your benefit will be recalculated to account for the amount that Social Security previously withheld.
If you are working while receiving Social Security benefits before reaching full retirement age, contact the SSA and let them know. Failure to notify the SSA may result in needing to repay benefits plus fees.
In addition to a reduction in benefits, your Social Security benefits may become taxable if they exceed the earnings thresholds. Whether or not you pay income tax on your Social Security benefits depends on your total income. When assessing the taxability of your benefits, all your income will be counted.
Income from retirement accounts and other unearned income will also count toward the total. If your benefits are taxed, only 50% or 85% of them will be taxed, depending on your total income.
Reentering the workforce may be difficult, but with planning and follow-through, it can be a wonderful opportunity to gain experience, develop new skills, and make connections, while improving your overall financial wellness.
Teri Parker is a certified financial planner and vice president for the Riverside office of CAPTRUST Financial Advisors. She has practiced financial planning and investment management since 2000. Contact her via email at Teri.parker@captrust.com.
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