5 Reasons To Work After You Retire

Jun 20, 2013

By Staff Writer State Farm™ Employee

Stay Fit Mentally, Physically, and Financially

What do you want to do when you retire? Buy a motor home and hit the road? Learn a new language? Work part-time?

For a growing number of American retirees, continuing to work makes perfect sense. Many find they simply run out of things to keep them busy, while others miss the camaraderie and sense of purpose work gave them.

There's also a very good chance of living a long time — to 85 or longer — which means being out of work and living off savings for 20 years or more.

Whatever the situation, working after retirement can be both financially and personally rewarding. Here are a few things to consider when planning the next phase of your life.

1. Financial Stability

If you're like most retirees, you may have enough savings and income from your retirement plan to cover the basics, but you'll also need to consider inflation, long-term care, and rising medical costs.

According to the 2013 Retirement Confidence Survey, only 14 percent of Americans are very confident they will have enough money to live in retirement.

Working during retirement means it's possible to keep your existing savings — and continue earning interest — while living off your extra income. Also, your pension benefits from your former employer are normally not affected unless you plan to return to work for them. Check with your plan provider to see if returning to work will have any impact on your benefits.

If you want to start planning for the future, our Retirement Illustrated™ calculator can help get you started.

2. Increase Your Social Security Benefits

By working full- or part-time, you can delay the start of Social Security benefits. The longer you wait, up until the age of 70, the bigger your monthly Social Security check will generally be. See how much you can expect from Social Security.

If you retire and begin to receive benefits before your full retirement age as defined by the Social Security Administration, your Social Security benefits may be reduced by as much as 30 percent, depending on the year you were born. See SSA.gov for more information.

Once you reach full retirement age, you can work as much as you like without impacting your Social Security benefits. There are no earning limitations once you reach your full retirement age. However, you should consult your tax adviser regarding the tax consequences of such work arrangements on your social security benefits.

3. Eligibility for Health Insurance Benefits

For many retiring seniors, the high cost of medical care can be quite a shock when they are no longer part of a company plan. This is especially true if you retire before 65, the age you qualify for Medicare.

And once you qualify and begin receiving Medicare, you may face significant out-of-pocket expenses including prescription drug costs. Even after you turn 65 and qualify for Medicare, it can be helpful to have additional health insurance through your employer because there are gaps in Medicare coverage.

Having a job that pays medical benefits after you retire could save thousands of dollars a year in medical expenses.

4. Social and Health Benefits

Exercise, reading, and crossword puzzles may provide the stimulus to help stay fit mentally and physically, but working is also an excellent way to stay engaged.

People who work after retirement often remain more active and socially connected, which can mean better overall health and fewer medical issues. Working part-time can give you a sense of being part of something without being tied to a career and long hours.

A 2009 study published in the Journal of Occupational Health Psychology concluded those who work following retirement reported being generally healthier and happier than their fully retired peers, whether they worked full-time or part-time. Other studies have shown that working can delay the onset of age-related diseases like dementia.

5. An Encore Career

Retirement can be the start of a whole new career, but it doesn't have to be the same old work.

Many seniors thrive in encore careers. You can begin a job that lets you give back to the community or channels your passion into your own small business.

An encore career provides a second chance at job satisfaction. A 2008 study by the Families and Work Institute found that people who go back to work while in retirement are more satisfied with their jobs than people who have not yet managed to retire.

Let your imagination be your guide to a retirement career. AARP has some great resources on helping you start a second career.

Neither State Farm not its agents provide tax or legal advice. Please consult your own tax or legal adviser regarding your specific circumstances.

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