Working past normal retirement age is not unusual. According to the Social Security Administration, 28% of individuals between the ages of 70 and 74 reported income from earnings in 2006, the latest year data are available. Among a younger age group, those between 65 and 69, approximately 46% had income from a job.
Some remain employed for personal reasons, such as a desire for stimulation and social contact; others still want a regular paycheck. Whatever the reason, the decision to continue working into your senior years could potentially have a positive impact on your financial future.
Working later in life may permit you to continue adding to your retirement savings and delay making withdrawals. For example, if you earn enough to forgo Social Security benefits until after your full retirement age, your eventual benefit will increase by between 5.5% and 8% per year for each year that you wait, depending on the year of your birth. You can determine your full retirement age at the Social Security Web site or by calling the Social Security Administration at 1-800-772-1213.
Adding to Your Nest Egg
Depending on the circumstances of your career, working could also enable you to continue adding to your retirement nest egg. If you have access to an employer-sponsored retirement plan, you may be able to make contributions and continue building retirement assets. If not, consider whether you can fund an IRA. Just remember that after age 70 1/2, you will be required to make withdrawals, known as required minimum distributions (RMDs), from traditional 401(k)s and traditional IRAs.
For 2009 only, Congress had suspended the RMD requirement. RMDs will have resumed in 2010 according to current rules. Keep in mind: RMDs are not required from Roth IRAs and Roth 401(k)s.
Even if you do not have access to a retirement account, continuing to earn income may help you to delay tapping your personal assets for living expenses, which could help your portfolio last longer in the years to come. Whatever your decision, be sure to apply for Medicare at age 65. In certain circumstances, medical insurance might cost more if you delay your application.
Work doesn’t have to be a chore. You may find opportunities to work part time, on a seasonal basis, or capitalize on a personal interest that you didn’t have time to pursue earlier in life.
Securities offered through LPL Financial, Member FINRA/SIPC
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I suggest finding a hobby you already love that can make a bit of income instead of part time work after retirement years. Thanks to the Internet, you can earn income as long as you have the ability to create, whether it’s writing, craftsmanship or drawings.
MoneyNing´s last blog ..Should I Pay Off My Mortgage Early, or Have One at All?
Ironically, it seems dangerous to work after retirement, b/c you might die and not really do what you’ve always wanted to do.
Financial Samurai´s last blog ..Someone Always Farts In A Crowd
I’m with David here. I know several people who have left the traditional work force, but still bring in money each month through side projects, small businesses, or hobbies. I plan on being in that group. I will probably always need something to keep me busy, but I don’t want to be a part of mainstream corporate America forever.
Patrick´s last blog ..You Need a Budget 3 Personal Finance Software Program
My husband and I are planning to retire at 52, but he will still want to officiate sports as his hobby job. I want to be able to volunteer more for the Houston SPCA, Pughearts, and Meals on Wheels.
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