Once the recession subsides, a possible labor shortage may cause employers to try to entice their experience workers not to retire or to come out of retirement. This can be a boon for those about to retire or already retired; it can be a way to beef up their retirement finances. If such an opportunity does present itself, consider what the ramifications would be for you.
*Is working in retirement a consideration?
If your projected retirement finances are less than satisfactory, then plan to work longer. But if you don’t need to work, consider what may entice you to work – perhaps part-time. With the possibility of employers’ need to retain about-to-retire employees, you may be able to propose an acceptable part-time position for yourself while collecting some or all of your pension benefits.
Consider what level of working would allow you to accommodate your social plans – along with your spouse’s – in retirement.
*Possible incentives for working longer:
Highly valued incentives for continued working from a recent study included: 1. receiving a full pension while working part time; 2. a pay increase, 3. continuing company-subsidized health insurance at the same level as full-time workers, and 4. receiving a partial pension while working part-time. Are any of these a possibility in your case?
*Social Security considerations:
Clearly, if you’re going to be working longer, you’ll want to delay beginning your Social Security at least until your full retirement age and perhaps longer. Delaying it will increase your monthly benefits, of course. Take that into account when you’re projecting how much more income you’ll have when you decide to retire later.
Working full time and delaying Social Security benefits, will maintain your current tax status. But if you’re working part-time and collecting pension benefits, your taxation rates may be a little lower and give you a little more bang for a buck earned.
Maintaining a working income may not only relieve pressure to draw on savings, but may allow you to make more savings contributions. Your working income allows you to continue contributing to your qualified plans (401(k), etc.) and IRAs. If you can get ’employer matching’ contributions – then that’s all the better.
*How long should you work in retirement?
Of course you don’t have to work ’til you drop. But as our life expectancy has increased, we’ve added more vigorous years to our lives. And the very act of working seems to forestall the effects of aging somewhat.
So we can work longer but still fully retire while our activity levels are high. And working longer allows us to beef-up our eventual benefits from Social Security and savings.
Shane Flait helps you with your financial legal, tax, and retirement goals.
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