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, more Americans are living longer and healthier, and want or need to work longer. Over two thirds of Americans who are not yet retired say that they plan to work after retirement.

Consider why you want to work. The 2 biggest reasons for working after retirement are:

• Personal reasons, such as having something to do.
• Financial reasons.

Personal reasons

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, vacations, 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 can choose work that interests you, without financial pressures such as putting kids through college. 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. Volunteering also helps older adults have a sense of purpose. They know that they make a difference and are productive.

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 a 40 hour a week job. They have other things they want to do, and look for work that allow them to take time off to travel or enjoy other leisure activities. The human body tends to slow down with age, and older adults may not be able to work as many hours as they once did.

Financial reasons

Savings, pensions, and Social Security may not meet your needs and wants during retirement. However, working after retirement could have a positive or negative effect on your income. 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. Workers age 65 or older can claim full benefits even if they continue to work full-time. However, if you work after you begin drawing Social Security, up to 85% of your Social Security benefits could be subject to income taxes.

IRA withdrawals. If you have a traditional IRA and go back to work after you retire, you must take required minimum withdrawals at age 70. These withdrawals count as income, and that means more of your social security benefits could be taxed. If you do not retire, and just continue working, you may be able to avoid the increased 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 go back to your old employer. Your pension would not be affected if you took a lump-sum pension payment when you left 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 Area Agency on Aging at 800-677-1116 to find out about the many volunteer options available.

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 visiting them online at http://www.ssa.gov/. You should also talk with your 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. Others are concerned that older employees are more likely to get injured or take more time off. On the other hand, some employers feel that older adults are more reliable and come with 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. You may decide to work for personal or financial reasons. 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.