To Work Or Not To Work In Retirement. That Is The Question.

The retirement age of 65 was chosen for Social Security at a time when average life expectancy was 67. Overall, life expectancy has trended up since then, so it should come as no surprise that 9 million Americans over age 65 now work either full time or part time.

That’s nearly one in five people who theoretically should be retired. This trend towards working at least part time after age 65 is one of the realities of the new economy that gets relatively little press.

This decision-making process looks different depending on where you are in life. If you are already retired and are considering returning to work, that’s a very different scenario than if you haven’t yet retired and are thinking about how you want to handle the upcoming years.

Social Security
The rules for Social Security are such that it is often best to simply delay starting those payments. The longer you delay starting Social Security, the larger your check will be.

If you are in good health and your income can adequately support you, delaying your Social Security benefit until later is a wise move. But it gets a lot more complicated if you have already started receiving your benefits and are considering returning to work.

If you resume working while drawing Social Security, your benefits can be reduced if you earn over a certain amount of money per year. If you are already drawing Social Security, you should meet with a financial advisor and find out exactly how returning to work could impact your Social Security benefits.

Time is Money
If you have already retired and you are thinking of returning to work, take a few minutes to consider your current lifestyle. If you are shopping sales, cooking from scratch and generally using your time to live well for very little money, returning to work may not be as profitable as you imagine.

Before you brush off your old resume, calculate how much lunch at a cafeteria or eatery could likely cost and factor in expenses like work clothes. If might make more sense to clip a few more coupons or pursue a casual income instead of a job.

Other Obligations
Think about how you are living now and whether or not you have taken on personal responsibilities without really thinking about the obligation it entails. For example, perhaps you have fallen into the habit of keeping your grandchild a few hours a week at your place.

Ask yourself: Is this de facto free daycare? Will it be a hardship your family to have to look for a daycare provider if you are no longer available?

Your Health
Your health may seem fine while not working, but can it stand the burden if you resume working? If you are in fragile health, working full time may be financially counterproductive if it leads to a big increase in medical expenses.

Casual Income
Instead of getting a job, it may make more sense to pursue a casual income. These days, it is possible to pursue part-time, flexible work in a way that didn’t exist historically. This may make more sense than returning to a regular job.

“If you rest, you rust.”
Money is usually the primary motivator for continuing to work, but it’s not the only reason to keep working. Some people believe that staying active helps keep you alive and maintains a higher quality of life.

Working part time may be a great compromise. It can provide a great work-life balance while easing the financial pressure.

February 11, 2020

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