Taichung, Taiwan – When Hao Pengfei retired last year, it didn’t feel like what he expected as a younger man.

“I used to think that retirement was more about relaxation and hobbies and less about stress and worries,” Hao told Al Jazeera from his home in the eastern Chinese city of Nanjing.

Hao worked as an administrator at a state-owned manufacturing company until he turned 60 last year.

Although Hao would have liked to continue working, company policy required him to retire at 60.

But Hao didn’t stay retired for long.

With mortgage payments, home renovations and medical bills exceeding his monthly pension payments, he was soon back on the job market.

He now works part-time as an accountant for a restaurant owner during the day and as a hotel security guard at night to supplement his pension.

“At the same time, my wife is trying to find new ways to reduce our budget at home,” he said, adding that his wife has not been able to work since suffering a back injury nearly 20 years ago.

Traditionally, many Chinese seniors move in with their children after retirement, but Hao doesn’t see that as an option.

“Our son lives in a small apartment in Shanghai with his wife and two daughters,” he said.

“There would be no room for us, and in any case my wife and I have our lives here in Nanjing.”

Hao’s son and his family visited him and his wife for a few days during the Lunar New Year holiday in February.

For many Chinese, the holiday involves heavy spending on travel, food and gifts, but Hao and his family tried to keep their spending to a minimum.

While they have spoiled their granddaughters a bit, they are eager to save money this year so that Hao can hopefully one day retire with peace of mind.

According to a survey by Chinese recruitment website 51job.com in 2022, more than two-thirds of Chinese seniors intend to return to work after retirement.

While some Chinese media outlets hail the return of retirees as a positive for the Chinese economy, which is facing labor shortages in certain sectors, Hao sees it differently.

“I think it shows that our pension system today cannot provide a decent living for many people, which does not bode well for the future,” he said.

Yang Jiang, senior researcher at the Danish Institute for International Studies, said the trend of retirees returning to work reflects a pension system that is struggling to meet people’s needs.

“Some people experience a significant drop in income when they retire, forcing them to go back to work,” Yang told Al Jazeera.

China’s pension system was originally a purely state-owned enterprise, intended only to supplement the caring role of adult children for their aging parents.

As China urbanized, family ties weakened and the elderly population increased, pension coverage was expanded to around 1.05 billion people – almost the entire population. However, major differences still exist.

While retired municipal employees like Hao receive an average basic monthly pension of about $470, agricultural and migrant workers can receive as little as $25.

Gu Chengji, 63, who works at a construction site just a few blocks from Hao’s home in Nanjing, is among those who would receive very little from the system if he were to retire tomorrow.

As one of nearly 300 million migrant workers in China, Gu is registered as a resident of the rural village where he was born and is therefore ineligible for the more generous welfare benefits of the city where he has lived and worked most of his life.

“My retirement will be the money I save,” Gu told Al Jazeera.

Gu believes he has to work at least another ten years before he has enough to retire, but he fears his body won’t survive another decade on construction sites.

“I’ve worked hard for the same company for years and they know I’m a good worker, so now they let me do some of the easier tasks,” he said. “But it’s still hard work and some nights I can’t sleep because of back and knee pain.”

The migration of millions of workers like Gu to China’s major cities has exacerbated gaps in the pension system by depriving rural regions of workers they need to fund their pension systems.

China’s real estate crisis has also exacerbated the funding gap, with many provincial governments relying on land sales to raise revenue.

China’s shrinking population suggests that the pension crisis will only get worse in the future.

Last year, the number of Chinese people aged 60 and over reached a record high of nearly 300 million. About 300 million more Chinese people are expected to reach the official retirement age of 60 for men and 50 to 55 for women in the next decade.

Fewer and fewer people are now entering the job market.

China’s population fell for the second straight day in 2023 as the country’s birth rate hit a record low of 6.39 births per 1,000 people.

The country’s main pension fund for urban workers is on track to run out of funds by 2035, according to a 2019 study by the state-sponsored Chinese Academy of Social Sciences.

“There are big challenges and they require pension reforms,” Allan Von Mehren, China economist at Danske Bank, told Al Jazeera.

There are already signs that such reforms are on the way, with state-backed media reporting on Beijing’s plans to gradually raise the retirement age.

“China also has untapped resources in terms of overall education levels and productivity that could be cultivated to help address future challenges,” von Mehren said.

Many economic analysts argue for the need to consolidate the country’s fragmented pension systems into a more unified system with greater flexibility.

But any welfare reform could lead to a public backlash.

When authorities in the cities of Wuhan and Dalian announced cuts to medical services for retirees last year, seniors took to the streets in protest.

Sun Mengjie, an accountant at a medical device supplier in the southern city of Guangzhou, said she was concerned that similar reforms would harm seniors across China.

“You can’t expect us to go back to the days when most people depended on their children as they grew older,” Sun, 53, told Al Jazeera.

Sun plans to work as long as possible.

“I worry that I won’t be able to rely on the government or others in the coming decades, so I want to save as much money as I can while I can,” she said.

Nanjing’s Hao hopes China can make the pension system financially viable without gutting it.

“If not, I worry that the China my granddaughters are growing up in won’t be a particularly nice place to grow old in,” he said.