The notion of working in retirement may seem paradoxical, but it is not. Although you may have moved beyond your primary career, you should still devote a part of your week to some type of money-making activity. It is possible to round out your schedule and add satisfaction to your retirement through part-time, freelance, or consulting work. Furthermore, there are financial benefits as well.
1. Additional Financial Stability
In most cases, retirees have sufficient savings and income from their retirement plans to meet their basic needs. Nonetheless, inflation, long-term care, and rising medical expenses need to be taken into account as well.
More Specially, in Retirement, You Can Benefit Financially From Working:
- Taking care of essential expenses. It is possible to pay for housing, food, utilities, and health care without using retirement savings by continuing to work. As a result, you may be able to invest some of your savings more aggressively and spend more on “lifestyle” items.
- Savings growth. For 2023, you can contribute up to $22,500 plus $7,500 in catch-up contributions if your employer offers a 401(k) plan. After reaching the annual contribution limit on your 401(k) or IRA, you may be able to continue saving with a deferred annuity.
- The amount of savings you can use every year can be adjusted according to your needs. A number of factors affect the amount of savings you can spend sustainably during retirement (i.e., your withdrawal rate), including market volatility, interest rates, inflation, health care, and risk tolerance. By earning income, you can offset these factors and prolong the life of your savings.
- Getting the most out of your Social Security benefits. In spite of the fact that you can begin collecting benefits at the age of 62, waiting to collect them can be a good decision. Every year you delay, your benefit increases until you reach the maximum age of 70 at which your benefit will be the highest. A person’s Social Security benefits are determined by his or her highest 35 years of earnings. Social Security benefits aren’t calculated based on your non-work years, so embracing lifelong work could increase yours.
2. Keeps Your Brain Healthy
Most people are unaware that their work may affect their mental capabilities after they retire, according to the University of Michigan’s Health and Retirement Study (HRS).“Your job can impact your cognitive functioning in later life,” says Amanda Sonnega, an associate research scientist at the Institute for Social Research (ISR).
It has been found that retirement is associated with some level of cognitive decline even after accounting for other health changes associated with age, she says.
“In general, working seems to provide a level of cognitive stimulation that is protective against cognitive decline at older ages,” Sonnega says. “Researchers are looking at what it is about work that serves this role.”
3. You’re Too Young to Enroll in Medicare
What happens if you’re retired but haven’t yet reached 65, the age at which you become eligible for Medicare? You may have to pay out-of-pocket for insurance or medical expenses.When seniors retire and no longer have access to a company-sponsored medical plan, the high costs of medical care can be quite shocking.
The solution? Work for an employer that offers health insurance even to part-timers.
You can save hundreds or even thousands of dollars every month by working part-time for a company that offers health insurance.
Part-time employees are offered health insurance benefits by many large companies, including Starbucks, Ikea, UPS, Costco, Delta, Trader Joe’s, Lowe’s, REI, and the American Red Cross. You can find more companies that offer part-time employees health insurance benefits by searching online for “health insurance for part-time employees”.
Medicare May Not Cover All Healthcare Costs
Furthermore, Medicare does not cover all healthcare costs. “Pre-pandemic, the average hospitalization cost was $285,000, meaning you could face staggering healthcare costs even with Medicare coverage,” writes Chris Porteous in a previous Due article.“Additionally, you should know that Medicare does not cover some critical health needs of retirees,” he adds. “These include long-term care, dentures, and hearing aids. Since 70 percent of seniors need assisted living care, that could be a significant financial problem.”
4. Preserves Your Portfolio
The more money you earn in retirement, the less money you’ll need to take from your investments to pay for it. The length of your savings can even be affected by low-paying jobs.Suppose you earn $20,000 a year as a retiree working part-time. For 30 years in retirement, a $500,000 portfolio generates $20,000 per year using the 4 percent withdrawal rule, notes Carolyn McClanahan, a financial advisor as well as a medical doctor. In most cases, it’s easier to earn $20,000 a year working part-time than to accumulate another half million.
5. Having a Sense of Community
Since 1938, the Harvard Study of Adult Development has been tracking generations of families, and one of its major findings has been that retirement well-being depends on good-quality relationships, according to Robert J. Waldinger, Harvard Medical School professor of psychiatry and study director.In retirement, the happiest participants replaced their old work relationships with new ones. Working regularly—whether full-time, part-time, or as a volunteer—creates an environment in which new interactions can be formed.
6. It is Possible to Draw Social Security While Working
Did you know that you can work while drawing Social Security benefits without losing your benefits if you stay under the IRS earnings limit?As of 2023, the earnings limit will increase to $21,240 for workers younger than full retirement age. For each $2 earned over $21,240, the Social Security Administration (SSA) deducts $1 from your benefits.
7. Eases Boredom
Here’s something that no one tells you about retirement. You’re probably going to be bored—especially if you retire early. However, it is possible to combat boredom after retiring by taking on new work.8. Gives You an Identity
When you meet someone new, the first question they ask is, “What do you do?” Most people answer this question by listing their job titles. But, the answer to this question is often elusive to retired people.A person’s job typically indicates how they contribute to their community. The ability to bring value to someone else is one of the benefits of having a part-time job.
9. You Can (Finally) Get Creative
As already mentioned, you can improve your health and reduce your risk of serious illness by staying socially active and exercising your brain. Engaging in creative part-time work that challenges your mind and body is the perfect outlet to remain healthy.Moreover, you can earn an income from your creative talents with a little effort.
For example, now that you have the time, you can finally pursue your passions, like painting, photography, woodworking, or baking. A local shop selling your products can be very satisfying and a great way to make some extra money. Or perhaps Etsy would be a better place for you to sell your items online.
Regardless, monetizing a lifelong hobby can become an exciting and lucrative part-time job.
