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Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington public employees.
I get this question all the time from clients approaching retirement. They're in their mid-to-late 50s. The pension numbers work. They're financially ready. But they're not sure they want to stop working completely. Maybe they love what they do and just want to dial it back. Maybe they want to stay connected to their profession. Maybe they're worried about losing structure and purpose. So they ask: Can I retire and then go back to work part-time? The answer isn't just "yes" or "no." It's more complicated than that. And the wrong move could cost thousands of dollars in pension benefits. The 867-Hour Rule You Need to Know Here's what most Washington public employees don't realize about working after retirement. If you retire from a DRS pension and then return to work for any DRS-covered employer (schools, state agencies, cities, counties), there's a strict limit. You can only work 867 hours per calendar year without affecting your pension.¹ That's roughly 16 hours per week for a full year. Go over that limit by even one hour, and your entire pension stops. Not reduced. Stopped.¹ It doesn't restart until you either separate from that employer or January 1 of the next year, whichever comes first.¹ The rule gets more complicated depending on your specific situation. Some retirees can work up to 1,040 hours under temporary legislation that runs through January 1, 2030.¹ For school districts, qualifying PERS, SERS, and TRS retirees can work in non-administrative positions.¹ The term non-administrative means positions that do not require an administrative certification (like Principal, Vice Principal, Program Administrator, Superintendent) and do not evaluate staff.¹ And there's another requirement that catches people off guard. You must wait at least 30 consecutive days after your retirement date before returning to work for any DRS employer.² You also cannot have any pre-arranged agreement (written or verbal) to return to work before you retire.² When Part-Time Work Makes Sense From what I've seen working with Washington public employees, part-time work after retirement makes sense in a few specific situations. First, when you want to stay engaged but need more flexibility. Teaching two classes instead of five. Working school hours instead of administrative hours. Doing the parts of your job you love without the parts that drain you. Second, when you have specialized knowledge that's hard to replace. School districts especially struggle to fill certain positions. If you have expertise they need, working part-time can be mutually beneficial. Third, when you're testing retirement before fully committing. Some people retire, try it for a few months, and realize they miss the structure and social connection. Working part-time can ease that transition. But here's what I always ask clients to consider: Is the financial benefit worth the restrictions? Because once you're subject to that 867-hour limit, you have to track every single hour carefully. Paid holidays count. Compensatory time counts. Sick leave and annual leave taken in place of normal work hours count.¹ Miss the mark and you lose months of pension payments. The Private Sector Alternative Now if you work for a non-DRS employer after retirement, none of these restrictions apply. Your pension continues. No hour limits. No waiting periods.¹ The coffee shop down the street? That's not a DRS employer. Your pension keeps coming. A private consulting firm? Not a DRS employer. Your pension keeps coming. Even working for a different state's government or federal government? Not a DRS employer in Washington's system. Your pension keeps coming. This is the path many retirees take when they want to work but don't want to deal with DRS restrictions. I've worked with clients who retired from state agencies and then started consulting for private firms. They make more per hour than they did as state employees, work on projects they choose, and their pension never stops. What About Social Security? This is where it gets even more interesting. Because if you're collecting Social Security before your full retirement age and you work, there's a completely different set of rules. For 2026, if you're under full retirement age for the entire year and earn more than $24,480, Social Security reduces your benefit by $1 for every $2 you earn above that limit.³ In the year you reach full retirement age, the limit jumps to $65,160, and the reduction is only $1 for every $3 you earn above the limit.³ This only applies to earnings before the month you reach full retirement age.³ Once you reach full retirement age, you can earn as much as you want with no reduction to your Social Security benefit.³ So if you're planning to work part-time and you're collecting both a DRS pension and Social Security before full retirement age, you need to think about both sets of rules. The Tax Consideration Here's something else to think about. When you combine a pension, Social Security, and part-time work income, you might push yourself into a higher tax bracket. Let's say your PERS 2 pension is $3,500 per month. That's $42,000 per year. Add Social Security of $2,000 per month. That's another $24,000. You're already at $66,000 of taxable income. Now add part-time earnings of $20,000 from working under the 867-hour limit. You're at $86,000. And depending on your filing status and other factors, that could mean a higher marginal tax rate than you expected in retirement. I'm not saying don't do it. I'm saying run the numbers first. Because sometimes the after-tax benefit of that part-time income is less attractive than it appears on paper. What This Means for You If you're thinking about working part-time after retirement, start by asking yourself why. Is it purely financial? Is it about staying engaged? Is it because you're not sure you're ready to fully retire? The answer to that question changes everything. If it's financial, run the numbers carefully. Factor in taxes, lost leisure time, and the hassle of tracking hours if you're going back to a DRS employer. If it's about staying engaged, consider whether private sector work or consulting might give you more flexibility without the restrictions. If you're not ready to fully retire, be honest with yourself about that. There's no shame in working longer before pulling the retirement trigger. The worst move you can make is to retire, go back to a DRS employer without fully understanding the rules, exceed 867 hours, and lose months of pension payments you were counting on. That happens more often than you'd think. Sources
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Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees. This article provides general information about estate planning documents and is not legal advice. For specific guidance on your situation, consult with a qualified estate planning attorney.
Picture this scenario. A husband suffers a massive stroke. He's a PERS 2 member with 28 years of service at the city. Not retired yet. Still working. Now he's in intensive care, unable to speak or make decisions. And his wife has a problem. She needs to access their retirement accounts to pay medical bills. But she can't. No power of attorney. No joint ownership on the DCP account. Nothing. She could eventually apply for disability retirement on his behalf through DRS¹. But first she'd likely need to petition the court for guardianship to get the legal authority. In the meantime, she's stuck. This is what happens to your money if you become incapacitated without the right documents in place. Your DRS Pension Requires Legal Authority DRS has a disability retirement process². But someone must apply on your behalf with legal authority to act for you. Typically, your spouse would need either a power of attorney you set up beforehand, or court-appointed guardianship³. The court process can take weeks or months with legal fees, court costs, and medical evaluations. Your DCP Account Is Frozen Without a Power of Attorney Your DCP account is in your name only⁴. If you haven't granted your spouse authority over retirement accounts in a durable power of attorney, they cannot access it. Not to withdraw. Not to change investments. Not even to check the balance. The account sits there. Your Bank Accounts Might Not Be Accessible Either Joint accounts usually remain accessible⁵, but banks may freeze them once aware of incapacity. Individual accounts, old 401(k)s, IRAs, brokerage accounts? All frozen without a power of attorney. The Documents That Actually Matter Two documents can prevent this. First, a durable power of attorney for financial matters⁶. This document names someone to manage your financial affairs if you become incapacitated. It typically covers bank accounts, retirement accounts, real estate, bills, taxes, and other financial matters. "Durable" means it stays in effect during incapacity. There are two common types: an immediate durable power of attorney (effective when signed) or a springing power of attorney (effective only when a doctor certifies incapacity)⁶. Many estate planning attorneys recommend immediate durable because springing powers can create delays. Second, a healthcare power of attorney⁷. This document names someone to make medical decisions for you. It's separate from the financial power of attorney because healthcare and financial decisions are governed by different laws. Most comprehensive estate plans include both documents. What Actually Happens Without These Documents Without powers of attorney, your spouse typically can't access your accounts. The bank, DRS, and your DCP provider will likely say the same thing: "We need legal authority." The solution? Petition the court for guardianship⁸. The process takes weeks to months with hearings, medical evaluations, and legal fees. Much of that process could be avoided with proper estate planning documents. The Power of Attorney You Actually Need From what I've seen working with clients, a durable power of attorney typically needs to explicitly grant authority to handle retirement accounts (DRS, DCP, IRAs, 401(k)s), access bank accounts, make tax decisions, manage real estate, and handle insurance policies⁹. Some powers of attorney are too vague, and financial institutions may want to see explicit language granting authority over retirement accounts. An estate planning attorney who understands Washington State law can help ensure your documents will be accepted by financial institutions. What to Do Next You're in your 50s. You're healthy. This isn't fun to think about. But in my experience, the people who end up in crisis are often the ones who assumed they had more time. The people who have peace of mind are typically those who addressed these issues when they didn't need to. If you don't have these documents, consider talking to an estate planning attorney in Washington State. Once you're incapacitated, it's too late to set these up. If you have documents older than five years, it may be worth reviewing them with an attorney. Laws change. Your situation changes. Your DRS pension and DCP account represent decades of work. Proper estate planning can help ensure they're accessible when needed. Sources
Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.
The Question That Stops Most Retirees I was reviewing a retirement plan last month when my client said something that caught me off guard. "I'm paying almost $400 a month for life insurance. My advisor told me I'd need it forever." He's 58, a city employee with 26 years of service, planning to retire next year. His kids are in their 30s and independent. His house is paid off. And he's still writing that check every month. What I've Learned Working With Retirees Most people think about life insurance the wrong way once they retire. They think the question is "Do I still need life insurance?" But that's not actually the question. The real question is: "What am I protecting against?" When you're working and raising kids, the answer is clear. You're protecting your family's income. Your mortgage payment. College expenses. The life you're building together. But in retirement? The entire picture changes. The Problem with His Policy His $400 monthly premium was for a universal life policy he'd bought 15 years ago. The death benefit was $500,000. We walked through what would happen if he passed away tomorrow. His wife would receive his survivor pension benefit from PERS 2¹. She could receive Social Security survivor benefits based on his earnings record, though she'd get the higher of either her own benefit or his survivor benefit, not both². Their house was paid off. Their kids were independent. She'd actually be fine financially. The $500,000 death benefit would just be extra money sitting in an account. Money that cost him $4,800 every single year to maintain. How Washington State Employee Benefits Change the Calculation Here's what most public employees don't realize about their retirement benefits. Your DRS pension includes survivor benefit options¹. When you retire, you can choose to have a portion or all of your pension continue for your spouse after you die. This is built into your benefit structure. Social Security also provides survivor benefits². Your surviving spouse can receive a benefit based on your earnings record. However, they receive the higher of either their own benefit or the survivor benefit, not both. These two income sources often cover most or all of your spouse's essential expenses in retirement. This is fundamentally different from private sector employees who rely primarily on 401(k) savings. Washington State public employees have guaranteed income sources that can continue after death. Three Situations Where You Might Still Need Life Insurance Life insurance in retirement isn't always unnecessary. Here are three situations where I consider it: You Have a Survivor Benefit Gap This is the big one. If you chose the single life pension option for maximum monthly income, your pension stops completely when you die¹. Zero. Nothing. Gone. Your spouse would be left relying entirely on Social Security and investment accounts. This is an enormous financial risk if your spouse depends on that pension income. Life insurance can bridge this gap during your early retirement years, providing income replacement until your investment accounts can sustain withdrawals or your spouse reaches full Social Security retirement age. You Have Dependent Children or Special Needs Dependents If you have minor children or adult children with special needs who depend on your income, life insurance provides essential protection. The Social Security survivor benefit for children generally continues until age 18³. For special needs dependents, permanent life insurance might be appropriate as part of a comprehensive plan. You Want to Leave a Specific Legacy Some people want to leave money to children, grandchildren, or charities. If your retirement accounts and other assets don't provide the legacy you want, life insurance can fill that role. But here's the key question: Is that legacy worth the annual premium cost? What He Decided to Do We ran the numbers together. With his 100% joint survivor option, his wife would receive a continuing pension after his death¹. The exact percentage depends on which survivor option he selects at retirement. She'd also have Social Security, receiving the higher of either her own benefit or his survivor benefit². Plus access to their $650,000 in savings. Her income would drop, but their expenses would drop too. One person eats less. Travel costs less. Healthcare through PEBB would continue. She'd be comfortable. He cancelled the policy after our analysis. That freed up $4,800 per year he could actually use now. How to Think About This for Yourself Here's the framework I use with clients: Add up your spouse's guaranteed income if you died tomorrow. Include survivor pension benefits and Social Security survivor benefits (remember, they get the higher of the two benefits, not both). Compare that to their estimated expenses. One person typically spends less of what a couple spends. If there's a significant gap, calculate how much insurance fills it. Then get term insurance quotes. If there's no gap or your investment accounts can cover it, you probably don't need life insurance. The Cost of Keeping the Wrong Policy Life insurance in your 50s and 60s gets expensive. That's money you could use now. Traveling. Helping your kids. Building your investment accounts. What About Final Expenses? Final expenses can be very expensive….but how expensive? If you have been a diligent saver, you can likely cover these expenses with your savings. But you don't need $500,000 of coverage for final expenses. Here's What to Do This Month Pull out your life insurance policies. All of them. Look at the death benefit amounts and the premiums you're paying. Then calculate what your spouse would actually receive from your DRS pension survivor benefit¹, Social Security survivor benefits² (the higher of the two), and retirement accounts. Ask yourself: Is this insurance still protecting against a real financial risk? Or is it just a habit from when your situation was different? If you're not sure, that's exactly the kind of analysis I help clients work through. Your retirement is about living well now while being smart about the future, not paying for protection you no longer need. Sources
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AuthorsBob Deal is a CPA with over 30 years of experience and been a financial planner for 25 years. Archives
January 2026
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