Working after Retirement

Retirement is seen as a time to stop working and spend the rest of your life slowing down and enjoying leisure activities. However, you may want or need to work after retirement. Over three quarters of Americans who are not yet retired say that they plan to do some kind of work for pay after retirement.

The 2 biggest reasons for working after retirement are:

• personal reasons, such as wanting to have something to do
• financial reasons.

Personal reasons for working after retirement

Many people look forward to retirement as a time to do things that they put off or never had time to do. This often includes projects around the house, traveling, and hobbies. However, after the closets have been cleaned, the trip is over, and the crosswords have been worked, boredom may set in. One benefit of working after retirement is that you may have fewer financial pressures and be able to choose work based more on your interests than on how much it pays. Many retirees begin new careers to fulfill lifelong dreams.

If you want to stay connected to others, working is a way to be around people. If this is the main reason for you to seek work, you may consider either volunteering or paid employment. Volunteering can be a way to meet other people who share your interests and appreciate your skills. For example, you might volunteer in a natural history museum, national park, or as a reading tutor in a school.

Some people want the challenge of solving problems and achieving goals at work. Others enjoy passing their knowledge and skills on to others.

How much do you want to work? Most retirees do not want to keep working 40 hours a week. You may want to find work that allows you to take time off to travel or enjoy other leisure activities. Also, the human body tends to slow down with age, and you may not be able to work as many hours as you once did.

Financial reasons

You may want to work because funds from your savings, pension, or Social Security are not enough to meet your needs. However, working after retirement could have a positive or negative effect on your finances. Some of the things you'll need to look at are:

• Savings. If you delay retirement, you can delay withdrawals from IRAs or other savings plans and have more time to build up a 401(k) or qualified retirement plan.
• Social Security benefits. Social Security benefit payments are based on your top 35 earning years. If you have a well-paying job, you could increase the amount of your monthly Social Security checks by staying on the job longer.

  Depending on your year of birth, you will reach your full retirement age at 65 to 67. At this time you will be able to claim full Social Security benefits even if you keep working full-time. However, up to 85% of your Social Security benefits could be subject to income tax.

  You can start your Social Security retirement benefits as early as age 62, but the benefit amount you receive will be less than your full retirement benefit amount. If you work between age 62 and your full retirement age, your earnings will reduce the Social Security benefit you receive during this time if you earn more than the annual limit. (For 2008, this limit is $13,560.) When you reach your full retirement age, you can get your full benefits with no limit on your earnings.

• Retirement savings plans. If you keep working past the age of 70 and 1/2, you may be able to postpone required withdrawals from your employer-sponsored retirement savings plan until after you retire. This can also affect your taxes.
• Pension problems. Returning to work after retiring could affect your pension. Be sure to check with your former employer to make sure you won't be hit with any penalties if you go back to work, especially if you work again for your former employer. Your pension will not be affected if you take a lump-sum pension payment when you leave your job.
• Health insurance. One benefit of paid employment is that your employer may provide group health coverage. It can be hard to find a part-time job that offers health benefits, so you may need to work more hours to qualify.

Where do I go from here?

If you are looking for volunteer positions, you can contact local schools, churches, hospitals, or museums directly. You could also contact the local senior center or call the Eldercare Locator at 800-677-1116 to find out about places where you can volunteer.

If you are seeking paid employment, make sure you know how it will affect your finances. Check with the Social Security Administration by calling 800-772-1213 or visit the Web site at http://www.ssa.gov. You should also talk with a financial advisor or pension administrator to find out whether paid employment after retirement will benefit you.

Your former employer may be your best option for a job after you retire. You have proven skills and experience. If you enjoyed the job and your coworkers, this could be the best place to start. However, if your job was very stressful, or you dreamed of retirement as a way to finally get away, it may be best to find a different employer or different kind of work.

If you look for paid employment, you should know that age discrimination still exists. Some employers believe that older workers take longer to train and work more slowly than other employees. They may be concerned that older employees are more likely to get injured or take more time off. Other employers feel that older adults are more reliable and have skills and a work ethic that make them right for a new job. A good resource for locating the best employers for older adults is the AARP Web site: http://www.aarp.org.

Deciding what to do when you retire is personal and the answers are different for everyone. Whether you become a dog walker or a consultant to a major corporation, the most important thing is that you enjoy what you do. Retirement should be some of the best years of your life.

Developed by RelayHealth.
Published by RelayHealth.
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