Working in retirement is the last thing retirees should be thinking about, right?! In the past, retirement has been portrayed as an ending, a grand exit from your years in the workplace. But the rules are shifting.
Labor force participation among those aged 65-74 is predicted to reach 32 percent by 2022, up from just 20 percent in 2002. As the Baby Boomer generation ages, more people are viewing retirement as an opportunity to enjoy the rewards of work in a whole new way. If you’re considering working in retirement, here are a few reasons why it could be beneficial.
4 Reasons to Consider Working in Retirement
Reason #1: Maintain a Routine
After years of working, many retirees look forward to the day when they can choose what to do, instead of feeling like they’re chained to a desk. The freedom of not having any responsibility is one of the biggest pulls of retiring.
But, in our conversations with folks, making that adjustment can be harder than it seems. Having too much free time can soon feel like a burden, and not having a set schedule after years of having one, is a tough transition to make.
A great way to ease that transition is to choose to work doing something you enjoy. It’s no longer about having to earn the paycheck to pay the bills and save up. Work can be fulfilling and getting to choose what you do can completely change the way work is viewed.
Reason #2: Continued Income
While working in retirement isn’t about earning as much as you can, anything you do earn will only help your financial situation. When I was younger and worked in a job where I made tips, that was my “walking around money”. The same can be said for retirees choosing to work during retirement.
Many retirees start drawing from their investments when they retire. And on one hand, of course they should because that’s what the money is for. But, on the other hand, the longer retirees can hold off on drawing from their investments, the more time it gives them to be invested in the market.
We always encourage folks that are in a good position to enjoy their retirement years because that is why you worked so hard in the first place. So earning any sort of paycheck in retirement only increases that sense of freedom and decreases the worry about what your investments are doing.
Reason #3: Delay Social Security
Along the same lines as not touching your investments, the longer Social Security can be delayed the better, in most cases. Social Security benefits become accessible at age 62, but full retirement benefits will only be available once an individual reaches their full retirement age, which is determined by their birth date.
Any benefits received before reaching your full retirement age are reduced by a percentage, also determined by birth date, ranging between 25 and 30 percent.
Depending on your circumstances, working into retirement may mean being able to delay benefits until your full retirement age.
The decision is much of the same as it pertains to drawing down investments.
Yes, you contributed to your Social Security your entire life, so of course you have a right to take it. But, doing so in the most prudent way possible should also be considered. Working for even the first few years in retirement to “replace” what Social Security would be, might be a wise decision.
Reason #4: Physical Health, Purpose & Connection
As I wrote about in another recent blog post, physical health, purpose and connection are what money is really serving in all of our lives.
Working in retirement can help improve all of these areas. It’s important to keep your body moving as you get older. Doing something where you are on your feet and active can be especially beneficial. And it could be a very nice change of pace if your career was more office based.
Doing something you care about in retirement is really the sweet spot. Finding a fulfilling role you are passionate about can be a huge boon to well being.
And if that’s not in the cards, at least just being out and about around people is important as well.
I know this may seem strange to recommend folks in retirement think about going back to work, but in the right context I really think it is something to consider.
The financial benefits speak for themselves. It is the social/health benefits that are the real driver.
We’ve seen it before where all folks dream about is retirement. Then they get there and it’s not all it’s made out to be. You can only play so much golf or read so many books, right?!
Your retirement years are there to be enjoyed. If that means not working at all and spending time with family or friends, or traveling, or simply relaxing with nothing to do, great, we’re all for that stuff too! But don’t rule out going back to work, just because it’s “work”.