Do you plan on working in retirement?
Some people reach their retirement age and find that they’re not ready to stop working. And while this can be due to improper planning, some people want to keep working in retirement because they’re passionate about their jobs or because of other aspects of retirement.
Working into the second half of your sixties, or maybe even longer, can mean a happier, more financially secure retirement when you finally leave your position.
Contemporary thoughts about getting older are changing, and more seniors are looking to stay in the workforce, whether in their longtime job or a second or third career.
If you’re considering working in retirement, you should know that there are many benefits that could outweigh your plans to fill your days with mahjong, picnics, and coupon clipping. Check out the upsides of continuing to work!
You Get Employee Benefits
The bonuses you get on top of your paycheck when working in retirement can be worth hundreds if not thousands of dollars. This includes employer-paid life insurance and employer contributions to your 401(k). Another important one is health insurance.
It can be cheaper than Medicare and provides you with more comprehensive coverage. Employer coverage is especially valuable if your spouse is younger than 65 years old and covered by your plan.
Whether you should maintain your employer’s health coverage over parts of Medicare depends on the size of the company you work for.
This is how it works: At 65, you qualify for Medicare Part A, which covers inpatient hospital services. Because Part A is free, there’s no reason you shouldn’t enroll.
It would also be beneficial if you enrolled in Medicare Part B for doctor visits, Medicare supplemental coverage, and Part D for prescription drugs.
Adjusting With Your Spouse
Most husbands and wives want to retire within a year or two of each other, says Richard Johnson, who is the director of the program on retirement policy at the Urban Institute. But what if there’s a ten-year age difference between the two of you?
When you retire, you have more leisure time at your disposal. Johnson continues to say that people usually want to spend that time with their partners.
If your loved one is much younger than you or simply not ready to retire, working in retirement for a few more years yourself is a simple answer to the “home-alone” syndrome.
Pursue A Different Career Path
Do you have a passion that you have always wanted to pursue? It may not be related to the full-time work you have done for your entire life, but it may actually have the potential to earn you an extra income.
Some people decide to pursue these passions and “retire” from their traditional jobs. Others choose the option of working in retirement to pursue careers that are related to the jobs they have done for the majority of their lives.
For example, you might decide to retire from your corporate job and become an independent consultant in the field. This can allow you to earn an income during retirement without worrying about the restrictive lifestyle and demands of working in a corporate environment.
If you’re among the people who are lucky enough to have a pension, and it hasn’t been frozen, you may be able to get a bigger payout by working a few more additional years. Pensions are calculated based on your salary and years of service.
Some plans base the benefit on your average earnings over the last three to five years of your employment. And others are based on your average wages over all the years in which you’ve participated in the plan.
Assuming your income is still going up, your pension benefit could be more prosperous for every year you end up working in retirement.
A Higher Social Security Benefit
The retirement age for Social Security is now 66 for people born between 1943 and 1954, and it will slowly rise to 67 for people born in 1960 or later.
But for every year you delay taking the benefit past full retirement age, you gain a bump of 8 percent in your benefit until you’re 70 years old. Suppose you’re healthy and anticipate having at least an average life expectancy 82 for men who reach 65 and 85 for women.
In this case, it would make sense if you waited until 70 to collect the more considerable benefit. This is especially true if you have a spouse who will prosper from a boosted survivor benefit.
But that means coming up with another way to cover your expenses during the interim. Working in retirement will keep the money flowing.
Safe Guard Your Nest Egg
You probably have some money saved up for your retirement. But some people start saving for retirement later on in life. This can impact the amount of money they have available when they’re ready to retire, creating financial concerns.
Perhaps you are concerned about using up the money you have saved. One way to avoid using the money or only using portions of it is to continue working.
While Social Security might offer enough to cover the bare minimum living costs, having a steady source of income while working in retirement can help relieve financial pressures. Even a part-time job can make a massive difference between having money stress or living comfortably.
You JUST Like Working
For many people, working isn’t all about just paydays and benefits.
The relationships you build, the recognition, and the sense of fulfillment that a job can sometimes provide, gives many people purpose and structure in their lives, says Dee Cascio, a psychotherapist and retirement coach in Sterling, Virginia.
And that can be particularly true for men, she says, who frequently rely on work for their social networking. If you don’t have a single clue about how you’ll spend your time or with whom after you leave the workforce, you can just keep working in retirement until you do.
Add More To An Investment Portfolio
Working in retirement is an opportunity for people concerned about whether they have enough money saved up to be able to continue to add to their existing retirement savings. It may be vital to use a more aggressive savings approach.
For example, you may need to consider investing in an opportunity such as crowdfunding to “snowball” some of the money you are earning by working longer.
As a rule, Retirement planners generally recommend having enough money in retirement savings to last up to 25 years.
For example, if the difference between your projected spending and income, including pensions and Social Security, in retirement is $25,000 per year, you’ll need 25 times $25,000, which comes out to $625,000.
Working in retirement is the best option if you fall short of this mark. Not only will you have less years in which you’ll be drawing down savings, but if you’re working, you can keep adding to your retirement account.
Even if you don’t add a single penny, the money in the accounts will continue to benefit from growth that’s tax-deferred.
A retirement planning professional is a valuable resource to employ if you have considered working in retirement. They can offer you lots of tax-saving advice. They can even help you to determine the best approach to working more efficiently.
For example, you might decide that part-time employment is a better option than full-time work because it will allow you to have more free time to enjoy your retirement and earn some extra income.
And let’s keep in mind that many people simply choose to keep working in retirement even if they don’t have to in order to feel and be useful.
Having a feeling of purpose can help keep us motivated as human beings. We have a natural desire to contribute to our community to feel fulfilled.
If you feel as though all of this sounds a bit too complicated, Amazon has a fantastic read on the matter: Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success
So how do YOU feel about entering your golden years? Even though it can be a scary thought, there are many solutions and resources to ease us into our retirement days!
If you found this article on working in retirement helpful, we have many more to offer you some great advice. Including: 10 Types of Retirement Income and Their Taxes