Forget early retirement, the trends all point toward working well after the traditional retirement age of 65 – reversing earlier trends of early retirement.
In fact, an AARP study reported that almost half of their respondents planned to be working seniors into their 70s or beyond.
The financial reasons for working after retirement are significant.
But, many people also find jobs in retirement to be a source of fun and vitality.
Explore the varied reasons to work below.
1) You Will Likely Live a VERY Long Time
It is important to understand that today's retirees have a very good chance of living a long time – to 85 or longer.
Retiring at 65 means that you could be out of work and living off your savings for 20 years or more.
Twenty years without work requires a lot of retirement assets and a lot of good hobbies.
- Is leisure and rest really how you want to spend that much time?
- Are you sure that you have the financial assets to live that long?
2) Insufficient Retirement Planning
Most households simply have not planned sufficiently for retirement.
You may have enough assets and retirement income to cover the basics, but are you sure that you have planned
adequately for inflation,
rising medical costs,
long term care, and
how long you are actually going to live?
These variables can have a profound impact on how long your money will last in retirement. Continuing to work in retirement
can provide additional assets to cover the financial uncertainties caused by these variables.
3) Need More Retirement Savings or Income
The most fundamental financial consideration of having a full- or part-time job after retirement is that you are earning money.
Working in retirement could enable you to continue saving money and therefore better your quality of life once you do stop working.
Studies show that less than 50 percent of retirement-age-households actually have adequate savings to maintain their quality of life in retirement.
It is likely that you will need the extra money.
If you are unsure if you have enough or not, use the NewRetirement Retirement Calculator to find out how long you savings will last in retirement.
4) Retain Existing Savings and Allow Them to Accumulate Interest
In addition to adding to your retirement assets, a retirement job might also mean that you won't need to draw down your existing savings.
You can retain your existing savings – enabling those assets to continue earning interest -- while living off income from your retirement job.
By delaying the use of your retirement assets you will be able to live more comfortably for a longer period of time in retirement.
5) Improve Your Monthly Social Security Payment
Social security benefits are based on your top 35 earning years. Depending on your work history, working past the traditional retirement age could have a significant impact on your Social Security benefit payments.
By working longer, you could insure a bigger monthly Social Security check.
And, working full or part time after retirement does not impact receiving your benefits after you have reached your "Full Retirement Age" as defined by the Social Security Administration. You can claim full Social Security benefits after you have reached your "Full Retirement Age" and still work full time.
- To learn more about what your full retirement age is, visit Find Your Retirement Age.
- If you are interested in learning more about how your benefits would be affected if you work and are taking benefits before your "Full Retirement Age," visit Work and Social Security.
You might also want to consider working full or part time as a way to delay the start of Social Security benefits.
The longer you delay the start of Social Security up until the age of 70, the bigger your monthly Social Security check will be. Review the Maximum-Taxable Earnings table to see how your Social Security benefits might increase with additional years in work.
6) Medical Benefits
Many retirees are not prepared for the high cost of medical care they'll face in retirement when they are no longer part of a company plan. Too many people believe that Medicare covers most or all expenses. The reality is that Medicare only covers a percentage of some of your medical bills.
Working after retirement can positively impact your medical benefits.
If your employer offers medical benefits, those benefits may be better than what you receive from Medicare and the Medicare supplemental insurance programs.
Medicare Part A and Part B are plans that almost all retirees can and should participate in.
Your ability to purchase and/or qualify for most additional or medicare supplemental insurance -- including employer plans -- is dependent on your enrollment in Medicare part A and part B.
However, discuss your health care options carefully with someone knowledgeable of the system and your circumstances.
Each situation will be unique.
Medical benefits from a retirement job are particularly important if you have taken early retirement.
If you retired before the age of 65, you are not yet eligible for Medicare and private insurance can be prohibitively expensive for seniors.
7) You Like Your Current Work
Yes, work can be a source of stress.
But, studies show that around half of all Americans actually enjoy their job.
And, it is important to be aware that depression after retirement is a common problem.
If you have invested a lot into your career and identify strongly with your work, you may be at risk for depression after retirement.
Before retiring, consider these types of questions:
- How will you spend your days in retirement?
- How much of your identity is tied up with your work?
- How do you define your purpose in life?
- How much attention and admiration do you derive from work?
More men than women experience depression after retirement.
Studies have shown that the self worth and identity of men have much to do with their careers.
Having invested so much into their careers, executives seem to have the most significant problems adjusting to retirement.
Men also seem to have a more difficult time making friends and finding things to do after retirement.
When considering retirement – be careful what you wish for and be sure to consider how you really feel about your work.
8) Macro Economics -- You Don't Want to Hurt the U.S. Economy
Economists are not entirely sure of the actual effects baby boomer retirement will have on the U.S. economy.
However, the idea of 76 million baby boomers entering retirement is cause for alarm.
Employers may need baby boomers to continue working.
If baby boomers retire at or before the age of 65, the United States may experience huge labor shortages – hurting the economy.
Alan Greenspan the former Federal Reserve chairman seems to support senior work.
He is quoted as saying, "Policies promoting longer working life could ameliorate some of the potential demographic stresses."
Furthermore, it will be interesting to watch what happens to economic growth in the United States as the baby boomer generation transitions from accumulators of wealth (working) to spenders of assets (retired).
9) Chronological Age is Not Your "Real" Age
The International Longevity Center funded a survey showed that the majority of Americans think that chronological age has nothing to do with "old age."
Only 14 percent of those surveyed indicated that reaching a specific age indicated that they were old.
The majority said that overall health was the important factor.
If your health is good at "retirement age" you might consider not retiring.
There is no real need for the rest and relaxation that retirement allows.
10) There is Other Work You Might Like
Working after retirement does not mean that you must stay at your current job or continue working full time.
Many retirees are retraining and pursuing careers that they really love.
These working retirees may not earn as much money as they did in their lifelong careers, but they enjoy the work or the flexibility of their new jobs.
Click here for more information about jobs for retirees.
11) You Like the Social Aspect of Work
Maybe you don't like "work" exactly, but many people find when they retire that they really miss the social aspects of work.
Having a place to go and people to see everyday is very important to the happiness of many people.
12) You Want to Stay Mentally Alert
Use it or lose it is what they say about your mental capacity as you age.
Crossword puzzles or a good book may provide the stimulus you need to stay mentally fit, but working is also an excellent way to stay engaged.
13) You Don't Have Anything Better to Do
Boredom is a common complaint amongst retirees.
Boredom can also lead to depression and mental and physical decay.
Before retiring completely, be sure you have an idea of what you would like to be doing and a plan for how you are going to do it.
14) Sense of Purpose
Retirement can force you to evaluate the very fundamental question of the purpose of life.
When faced with the prospect of wide open days with no where to go, retirees must confront what to do and why.
For some people, their existing work is their real purpose – they derive great pleasure and satisfaction from work and yet they don't realize it until after they retire.
Other people find that transitioning to a new career gives them the most satisfaction.
Other people will want to pursue leisure, time with family or the arts.
By evaluating your values, you can come up with a plan for spending the last phases of your life in a way that is meaningful to you.
If a working retirement is not for you, but you do require additional retirement income, you might consider the following retirement options: