I can understand that. I took a stab at it myself some years ago – I even moved to Florida, bought a home on a golf course, and played golf for about three years when it hit me: I wanted to get `back in the game’. I realized I missed actually having something to do – and I wanted something to do that would actually have significance. That was 23 years ago. My ‘retirement’ has become a true second career. By the way, that’s not my office pictured – this one’s too neat.
Oh, yes, let’s not forget the effect the Great Recession had on many people. About that time, I was glad I was working! And, many others contemplating retirement began re-evaluating their future plans, as well. Working past normal retirement age is not a new necessity. According to the Social Security Administration, more than 30% of individuals between the ages of 70 and 74 reported income from earnings in 2010, the latest year data are available. Among a younger age group, those between 65 and 69, nearly 49% had income from a job. [Source: Social Security Administration, Income of the Population 55 or Older, 2010, March 2012 (latest available).]
There are good reasons to stay productive: You can start with health, both physical and mental; but, it’s also true that, as long as you CAN work, it simply makes sense – every dollar that comes from the outside isn’t draining your nest-egg. And, if you can work in some form of self-employment, you can even exercise some degree of control over your schedule!
There’s another benefit: If you earn enough to forgo Social Security benefits until after your full retirement age, your eventual benefit will increase by between 5.5% and 8% per year for each year that you wait, depending on the year of your birth – that’s more than double the inflation rate!. You can determine your full retirement age at the Social Security Web site (www.ssa.gov) or by calling the Social Security Administration at 1-800-772-1213.
One client once told me, “I’ll never live long enough to get all the money back I gave up!” I reminded him that if he was dead, he didn’t have a problem. It’s living too long that creates the problems – and you’ve heard of Murphy’s Law.
Seeing Money Grow is Good.
Depending on the your circumstances, working longer could also enable you to continue adding to your retirement nest egg, either through an employer-sponsored retirement plan or an IRA, or, if your self-employed, some other tax-deferred means. Remember however that after age 70 1/2, you will be required to make withdrawals, known as required minimum distributions (RMDs), from traditional 401(k)s and traditional IRAs. RMDs are not required from Roth IRAs and Roth 401(k)s.
By the way, whether you retire or not, don’t forget to apply for Medicare at age 65. In certain circumstances, medical insurance might cost more if you delay your application.
And, don’t overlook part-time, seasonal, or temporary opportunities – all of which can provide excellent opportunities for staying in the game.
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Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.
The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.