How Do You Envision Your Life After You Retire?
At a tropical resort soaking up the sun? Spending time with you grandchildren? Or, at a job earning extra income to pad your savings? Retirement can take on many different forms—bringing new experiences and new ways of living. Before you retire, you might ask yourself what this phase of life means to you. For some retirees, it may mean a life full of relaxation and family time, but others struggle with idleness or may require additional cash flow. If you think you fit in the latter, it may make sense to work in some form in retirement.
Many consider working after retirement in some capacity. Some Fisher Investments’ clients have secondary careers providing them additional income and other personal benefits. If you choose to work after retirement, consider different options that can make your post-retirement work experience enjoyable and supportive of your lifestyle.
Reasons for Post-Retirement Employment
While working after retirement might be a choice for some retirees, for others it might be a necessity. Your retirement benefits—such as those from social security or a pension—might not provide enough income, and you might still need (or want) a job for an additional source of earning.
Here are some common reasons retirees may end up working after they retire:
- Extra cash flow: This might seem obvious, but If don’t believe your retirement income (e.g., Social Security, pension, etc.) will cover your retirement expenses, or if you need an extra boost of cash, post-retirement employment might make sense.
- Enjoy working: If you are working toward certain goals or projects, seeing them through to the end may be personally satisfying.
- Business owner: If you own a business, you may not want to let it go completely. Perhaps you enjoy your self-employed status, the invigorating work or the supplemental source of income.
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Criteria to Evaluate Post-Retirement Employment
Regardless of your reasons for working post-retirement, there are likely several factors you’ll want to consider. For example, do you plan to work for an employer or run your own business? Working for an employer may or may not provide you with the ideal accommodations you seek as compared with running your own business. In our view, here are some of the primary things to evaluate:
- Pay: Do you want to receive a specific amount of compensation per year, or might you need to earn consistent cash flow? Depending on your needs, it may make sense to work for less compensation if the work you are doing is more flexible or enjoyable. If you need to earn more money to cover retirement expenses, then your rate of pay is likely to be more important to your decision.
- Physical demand: As you age, you may be less able to perform labor-intensive jobs. Take this into account when searching for a job.
- Proximity to home or family: Do you plan on walking or driving to work? How far are you willing to commute? This important factor impacts the amount of time you can spend with family or on your other priorities.
- Family business: Are you the entrepreneurial type who already runs a business? If so, how often do you plan to go into the office? Can you do some of your tasks from home? Think of how you can make your work match your retirement lifestyle.
Social Security Considerations
Social Security benefits are a significant part of income for many retirees. Whether you are planning to work after you retire or not, understanding the nuances of taking Social Security benefits is important.
First, consider your full retirement age. This is based on your birth year. If you decide to take Social Security retirement benefits before this age, they may be permanently reduced. If you delay taking benefits beyond your full retirement age, up until age 70, you can receive a permanent increase in benefits. Some working individuals may find that staying at a job and delaying Social Security retirement benefits may be more beneficial for their financial situation.
However, if you decide to take Social Security retirement benefits and continue working, whether part-time, full-time, or as an business owner or employer, be aware of the effects. If your earnings are beyond a certain yearly limit while you are under or at full retirement age, your retirement benefits may be reduced.
We recommend speaking with your tax adviser or financial representative about your Social Security options regardless if you are employed during your retirement years.
Working after Retirement: Not Necessarily a Negative
Aside from additional income, a second career during retirement may come with additional perks: new people to connect with, a sense of fulfillment and something to keep your mind sharp and active. It may keep you from becoming socially isolated by providing you with a wider base of people with whom to share stories and life experiences.
If you are considering integrating work into your retirement lifestyle, make sure it aligns with your needs and goals. You may be able to be more picky about location, flexibility and the nature of the job itself. If you plan on working in retirement and would like the help of a dedicated investment adviser to manage your retirement savings, Fisher Investments may be able to help. To learn more, call and speak with one of our qualified representatives today.