Should You Find A Retired Job? Yes, here’s why.
After a 30-year career with
Procter & Gamble,
Francis Nelson Beebe was living his retirement dream – playing about 200 rounds of golf a year – before a revelation.
“One day I was standing over a putt and I said, ‘I can’t do this all my life,'” recalls the former logistics manager.
For Beebe, who graduated from the Cordon Bleu Culinary Program after retiring from P&G, it meant a second act as a baker and owner of Mr. Nelson’s Cookies. Five days a week, Beebe bakes 24 sets of a dozen artisanal chocolate chip cookies that he sells in packs of six or 12 on the internet or individually at weekend farmers’ markets.
“I’m 73 and feel like I’m 45,” says Beebe, who cooks in Gold Canyon, Ariz., After retiring for seven years. “I can’t wait to get up in the morning.”
The share of working Americans of retirement age has doubled since 1985, according to a study by investment firm United Income that looked at federal data. Twenty percent of people 65 and over are working or looking for work.
Many Americans, especially low-income retirees, have no choice but to continue working to support themselves. Even for higher-income families, part-time work can allow them to delay withdrawing from retirement portfolios or delay collecting Social Security to maximize its value.
Other people with no need for money choose to work in retirement to stay busy and engaged. Health experts say maintaining social connections and physical activity help slow aging, and part-time work can help either way.
“Keeping moving is what keeps you from getting fragile as you get older,” says Carolyn McClanahan, who is both a doctor and financial advisor in Jacksonville, Florida. McClanahan recommends that all of his clients continue to work in retirement if they can find something they value.
One of his clients is a retired corporate executive. “She really started to languish, aimlessly” after her retirement, says McClanahan. The woman got a job as an executive assistant and worked for another five or six years, earning $ 30,000 or $ 40,000 a year, before retiring again. She has more outside interests and is doing much better in retirement the second time around, McClanahan says.
If you are retired or preparing to retire, here are the financial and health benefits that can come from continuing to work at a certain level.
Every dollar you earn in retirement is another dollar that you don’t have to withdraw from your investments. Even low-paying jobs can make a big difference in the length of your savings.
Suppose you earn $ 20,000 with a part-time job as a retiree. It takes about $ 500,000 to generate $ 20,000 per year for 30 years in retirement using the 4% rule for withdrawals, McClanahan points out. It’s usually easier to earn $ 20,000 a year working part-time than it is to raise half a million dollars more.
“By not having to dip into your wallet, it allows it to grow,” says Karl Schwartz, Miami financial advisor and chartered accountant. “Your assets end up growing a little longer in this scenario.”
Delay social security
This government pension is an inflation-adjusted pension with survivor benefits. And you have every incentive to make it as big as possible before you start collecting it, especially if you’re the highest earner in a family.
Let’s say you retire at 62 and have to collect $ 3,000 a month from Social Security at age 67. If you choose to start Social Security early at age 62, you’ll get 70% of that amount, or $ 2,100 per year. month.
Now suppose you get a part-time job to replace that money. You work for eight years until age 70, then start collecting Social Security. You will now receive $ 3,720 per month for the rest of your life, 77% more than the $ 2,100 you would have received at 62 and 24% more than the $ 3,000 at 67.
And it’s not just you who come out on top. When you die, your spouse will effectively receive this larger check for the rest of their life.
What if you start collecting Social Security at 62 and realize it’s a mistake? Within 12 months, you can pay back all of the money you collected from Social Security and wait until later to start your benefits.
Although this is not an option, retirees get by by going back to work. Some are reluctant because of the Social Security income limit, which cuts their benefit by $ 1 for every $ 2 they earn over $ 18,960. But, in most cases, they will get that money back because Social Security will increase their benefits after they reach full retirement age. It is the equivalent of early retirement.
Make Roth IRA Contributions
If you work part time and are over 50, you can contribute up to $ 7,000 per year of earned income to a Roth individual retirement account.
Since Roth accounts are funded with after-tax money, any money withdrawn from them is tax-free. They offer the potential for decades of tax-exempt growth and should typically be the last accounts you use in retirement, says financial advisor and chartered accountant Ann Gugle of Charlotte, North Carolina.
She calls the Roth accounts an “insurance policy” in case the government raises tax rates in the future. Roths are also a great way to pass money tax-free to children, because you pay no tax on investments in a Roth in your lifetime, they are tax-exempt for heirs and children. heirs have up to 10 additional years of tax-free growth. before having to empty the Roth. And they still won’t pay taxes when they empty the Roth.
Stay logged in
Research has shown that older people who maintain strong social networks have better overall health, including better brain function. Working part-time forces people to stay connected.
If you continue to work part-time for your old business, you are maintaining the network that you built during your working life. If you step into a new framework, you start to build a new network. Either way, it’s good for your health. And if you learn a new skill in retirement, that also helps your brain.
Lee McGowan, a Boston-area financial advisor, says his clients increasingly see retirement as a time to slow down, not stop working. “People come to 65 and say, ‘What am I going to do for the rest of my life, and what makes sense, and I want to keep working,’” says he.
Many retirees end up doing similar work to what they did during their careers, sometimes in the same companies.
Lauren Lindsay, a financial advisor from Houston, has many clients who retire from energy companies and then return to work in industry. “They’re brought back because they have expertise and can complete a project or mentor their successor,” she says.
Jim Price, 75, retired four years ago as a primary care physician employed by the University of Florida at Jacksonville. He retired and moved to Ocala, Florida. The University of Florida at Gainesville asked him to come three days a week to work in his cardiac practice. He spent three years doing this.
Price has not worked in the past year as he and his wife have traveled extensively, but he plans to work part-time as a doctor again.
“I know guys who are 90 years old before they quit smoking,” he says. “Physically, maybe they were compromised. But mentally, they were pretty good.
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