Planning on Working Past 70? Better Think Again

Shutterstock

Many Americans now hope to be able to work past 65 to help cope with rising costs. For many, the dream of retiring at 62, or even 65, appears to be beyond reasonable expectations. Some older Americans are thinking they may never be able to retire.

Although they expect to stay employed longer, many have already discovered that it also may not be a realistic hope. Many large companies (including Google, Amazon, Microsoft, and many more) have laid off hundreds of employees, and smaller companies are sometimes bought, merged, or closed. The result for many older Americans is that they were laid off or forced to retire years before they planned to. Afterward, many seniors found that companies would not hire them because of their age, leaving no other choice but to retire.

Forbes reveals that surveys taken by Pew Research indicate that as many as 20 percent of Americans 65 and older still work at a job.

Most Seniors Will Soon Be Working Past 75

The Bureau of Labor Statistics predicts that as many as 96.5 percent of people 75 and older will need to be working by 2030. This projection indicates that nearly all of them still need to be working at and beyond that age primarily because they do not have enough money saved to meet their needs in retirement.

Health problems also prevent many seniors from working longer than 65. Injuries, accidents, or events such as a heart attack, stroke, or cancer will force many to retire earlier than expected. Many also leave a job to care for a loved one.

Facing the possibility of an early retirement—even if it is against your retirement plans—reveals the need to be ready to retire earlier than your anticipated retirement date. Because the future is unknown, you may need to be prepared to retire three or more years ahead of your planned retirement.

Working Longer May Help You Live Longer

Besides being able to put more money into a retirement account, you may want to work longer because it may help you live longer. A study reported in the Harvard Business Review revealed that working longer may reduce your mortality rate by 11 percent.

Sign-Up for Medicare

Medicare has penalties that you may have to pay for the rest of your life if you do not apply on time. You have a seven-month window to apply for it—three months before your birthday, your birthday month, and three months after. USNews says the penalty is 10 percent for every year you fail to get enrolled.

The exception to the penalty is if you are still working and your employer’s health plan covers you. Also, if your spouse’s health plan by their employer covers you, you do not need to sign up for Medicare, but you will need to within eight months of your spouse’s retirement. COBRA coverage and being covered by a retirement plan are not suitable to escape the Medicare penalty.

Claim Social Security

It is not a good idea for most people to take Social Security as soon as they turn 62—if you can avoid it. Since you cannot ensure that you can keep working into your late 60s and early 70s (when you need to start taking required minimum distributions [RMDs]), you may need the money to make ends meet.

Every year you wait to claim Social Security benefits, you get 8 percent more. The difference in benefits between 62 and 70—when you can get the maximum benefit—is about $1,000 more monthly.

Remember, too, that Social Security only allows you to earn so much per year until you reach your full retirement age. If you make more than the allowed amount, your benefits will be reduced, the Social Security Administration (SSA) says, by $1 for every $2 you earn above the 2024 limit of $22,320.

During the year you reach full retirement age, the government will deduct $1 for every $3 earned before you reach that age. During the months before you reach your full retirement age, you have an earnings limit of $59,520. After your full retirement age, there is no limit to how much you can earn.

If you live in certain states, there are 11 of them that tax your Social Security benefits. Newsweek reports that Colorado, Connecticut, Kansas, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia currently tax your benefits. West Virginia, though, has a bill in place that may eliminate these taxes soon.

Prepare Now for Retirement

Preparing for retirement as early as possible will help you be ready to retire comfortably when you reach retirement age. People live longer now, and your medical bills will likely increase after reaching 65.

The more you can contribute to an employer’s retirement plan while still young, such as an IRA or 401(k), the better off you will be later. You can also put money into a health savings account (HSA), which can help you save money because contributions are made pretax, grow tax-free, and can be withdrawn tax-free when used for qualified medical bills. Once you get Medicare, you can no longer contribute to an HSA.

Consider Taxes

Taxes can eat up a large percentage of your retirement savings. Any money you get from retirement accounts, pensions, investments, etc., can be taxed as high as 37 percent, depending on your income range and the type of account. You also should prepare to reduce your taxes during your retirement years to have more to live on.

Even if you are laid off or must quit to care for a loved one, you still have an opportunity today to get work-from-home jobs or work as a freelancer. The best retirement strategy is to put more into a retirement account with your employer or get a solo 401(k) if you are self-employed. Talking to a financial advisor can help you prepare the best retirement plan.

The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.