The Great Recession has many older Americans considering the prospects of staying in the workforce past their normal retirement again. But, working past your normal retirement age is not a new phenomenon.
The Great Recession has many older Americans considering the prospects of staying in the workforce past their normal retirement; but working past your 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.1
Some remain employed for personal reasons, such as a desire for stimulation and social contact; others still want a regular paycheck. Whatever the reason, the decision to continue working into your senior years could potentially have a positive impact on your financial future.
Working later in life may permit you to continue adding to your retirement savings and delay making withdrawals. For example, 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. You can determine your full retirement age at the Social Security Web site https://www.socialsecurity.gov/ or by calling the Social Security Administration at 1-800-772-1213.
Adding to Your Nest Egg
Depending on the circumstances of your career, working could also enable you to continue adding to your retirement nest egg. If you have access to an employer-sponsored retirement plan, you may be able to make contributions and continue building retirement assets. If not, consider whether you can fund an IRA. Just remember 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.
Even if you do not have access to a retirement account, continuing to earn income may help you to delay tapping your personal assets for living expenses, which could help your portfolio last longer in the years to come. Whatever your decision, be sure to apply for Medicare at age 65. In certain circumstances, medical insurance might cost more if you delay your application.
Work doesn’t have to be a chore. You may find opportunities to work part time, on a seasonal basis, or capitalize on a personal interest that you didn’t have time to pursue earlier in life.
1Source: Social Security Administration, Income of the Population 55 or Older, 2010, March 2012 (latest available).
Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content. © 2014 Wealth Management Systems Inc. All rights reserved.
Resist Emotional Decision-Making
It pays to have a plan; but, to get one you need a proven process.
First, sit down with your spouse and have a talk. You might find this checklist helpful. Need some educational input? Take a look at these free Life Guides and worksheets.
And, don’t forget Social Security planning. The wrong claiming strategy could conceivably cost hundreds of thousands of dollars! You can learn more on the IFG Social Security Strategies website.
Of course, you can talk with me.
Enjoy!
Jim
ADDITIONAL RESOURCES:
Arrange a brief 15-minute introductiory phone call with Jim Lorenzen, CFP®, AIF® here.
Social Security – The wrong claiming strategy could conceivably cost hundreds of thousands of dollars! Knowledge is more than power; it’s real money. You can learn how to get to the right strategy with the right planning.
College Planning and Funding Strategies – Just like with the airlines, there are often two prices people pay for the same education: The price paid by the informed and the price paid by the uninformed. What are the projected four-year costs for the college your student desires? How much scholarship money will your student qualify for? You can see a short video, “A Lesson in Paying for College”, and download a free report, “Insider Strategies and Secrets to Reducing your College Costs.” You can learn more on the IFG College Funding site.
Financial Planning and Investing:
IFG Report: Understanding Mutual Funds
IFG Report: The Hidden Risk No One Talks About (Registration required)
Begin the discussion with your spouse with this Financial Converstion Checklist. (No registration required)
Facing financial decisions but feel you need to do some homework first? You might benefit from looking through our free Life Guides and using some financial worksheets!
Visit theIFG Website!
Follow Jim on Twitter: @jimlorenzen and also on Jim’s MoneyBlog
Jim on LinkedIn
IFG on Facebook
Become an IFG client! Schedule your 15-minute introductory phone call here!
———————
Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice.
The Independent Financial Group is 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. Jim can be reached at 805.265.5416 or (from outside California) at 800.257.6659.
Interested in becoming an IFG client? Why play phone-tag? You can easily schedule your 15-minute introductory phone call!
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.
