Working after Retirement

Retirement is seen as a time when you can stop working and spend the rest of your life slowing down and enjoying leisure activities. However, you may want or need to work after retirement. Over three quarters of Americans who are not yet retired say that they plan to do some kind of work for pay after retirement.

The 2 biggest reasons for working after retirement are:

• personal reasons, such as wanting to have something to do
• financial reasons.

Personal reasons for working after retirement

Many people look forward to retirement as a time to do things that they put off or never had time to do. This often includes projects around the house, traveling, and hobbies. However, after the closets have been cleaned, the trips are over, and the crosswords have been worked, boredom may set in. You may find yourself wishing you had a job. One benefit of working after retirement is that you may have fewer financial pressures. You may be able to choose work based more on your interests than on how much it pays. Many retirees begin new careers that fulfill lifelong dreams.

If you want to stay connected to others, working is a way to be around people. If this is the main reason you would like to go back to work, you may consider paid employment or volunteering. Volunteering can be a way to meet other people who share your interests and appreciate your skills. For example, you might volunteer in a natural history museum or national park. Or you might volunteer as a tutor in a school.

Some people want the challenge of solving problems and achieving goals at work. Others enjoy passing their knowledge and skills on to others.

How much do you want to work? Most retirees do not want to keep working 40 hours a week. You may want to find work that allows you to take time off to travel or enjoy other leisure activities. Also, you may find that you tire more easily and may not be able to work as many hours as you once did.

Financial reasons

You may want to work because funds from your savings, pension, or Social Security are not enough to meet your needs. However, working after retirement could have a positive or negative effect on your finances. Some of the things you'll need to look at are:

• Savings. If you delay retirement, you can delay withdrawals from IRAs or other savings plans. You can have more time to build up a 401(k) or other retirement plan.
• Social Security benefits. Social Security benefit payments are based on your top 35 earning years. If you have a well-paying job, you could increase your monthly Social Security payments by staying on the job longer.

  Depending on your year of birth, you will reach your full retirement age at 65 to 67. At this time you will be able to claim full Social Security benefits even if you keep working full-time. However, up to 85% of your Social Security benefits could be subject to income tax.

• You can start your Social Security retirement benefits as early as age 62, but the amount you receive will be less than it will be if you wait until your full retirement age. Also, earnings from your job will lower the Social Security payments you receive during this time if you earn more than the annual limit. (For 2010, this limit is $14,160.) When you reach your full retirement age, you can get your full benefits no matter how much you are earning.
• Retirement savings plans. If you keep working past the age of 70 and 1/2, you may be able to postpone required withdrawals from your employer-sponsored retirement savings plan until after you retire. This can also affect your taxes.
• Pension problems. Returning to work after retiring could affect your pension. Be sure to check with your former employer about possible penalties, especially if you work again for the same employer. Your pension will not be affected if you take a lump-sum pension payment when you leave your job.
• Health insurance. A benefit of paid employment may be group health coverage. You cannot get Medicare until you are 65 years old unless you are disabled. If you retire before your 65^th birthday, you will need to find health insurance through employment or pay for it on your own. It can be hard to find a part-time job that offers health benefits, so you may need to work more hours to qualify.

Where do I go from here?

To find out about places where you can volunteer, you can:

• Contact local schools, churches, hospitals, or museums.
• Contact your local senior center.
• Call the Eldercare Locator at 800-677-1116.

If you are seeking paid employment after retirement:

• Make sure you know how it will affect your finances. Check with the Social Security Administration by calling 800-772-1213, or visit the Web site at http://www.ssa.gov.
• Talk with a financial advisor or pension administrator to find out the effects of paid employment on your finances.

Your former employer may be your best option for a job after you retire. You have proven skills and experience. If you enjoyed the job and your coworkers, this could be the best place to start. However, if your job was stressful, or you dreamed of retirement as a way to finally get away, it may be best to find a different employer or different kind of work.

If you look for paid employment, you should know that age discrimination still exists. Some employers believe that older workers take longer to train and work more slowly than other employees. They may be concerned that older employees are more likely to get hurt or take more time off. Other employers feel that older adults are more reliable and have skills and a work ethic that make them right for a new job. A good resource for locating the best employers for older adults is the AARP Web site: http://www.aarp.org.

Deciding what to do when you retire is very personal. The answers are different for different people. Whether you become a dog walker or a consultant to a major corporation, the most important thing is that you enjoy what you do. Retirement should be some of the best years of your life.