Unless you are physically unable to continue working, there are a number of benefits to working past the traditional retirement age, according to an article in Kiplinger, “6 Reasons to Work Past Retirement Age.” All of them are worth serious consideration.
Employee Benefits. The added fringe benefits that accompany your paycheck can be worth hundreds or even thousands of dollars. That includes employer-paid life insurance and employer contributions to your 401(k). Don’t forget about health insurance, which can be cheaper than Medicare and provide better coverage. This coverage is valuable, especially if your spouse is under age 65 and covered by your plan.
A larger pension. If you're fortunate enough to have a pension, you may get a greater payout by working a few more years. Pensions are based on your salary and years of service. Some calculate the benefit on your average earnings over the last three or five years of employment. Others base it on your average earnings over all the years you've participated in the plan. If your income is still increasing, your pension benefit could be better for every year you work.
You enjoy working. Many people simply enjoy working, especially for the relationships, recognition and sense of fulfillment. It provides people with purpose and structure. If you’re not sure how you'll spend your time in retirement, you might consider working until you do.
A nicer nest egg. You should have enough in retirement savings to last approximately 25 years. If you think you won’t have enough savings and income, working longer is a wise solution. When you keep working, you'll have fewer years before you’ll need to dip into savings, and you can keep saving in your retirement accounts. Even if you don't invest further, it’s still tax-deferred growth.
More Social Security benefits. The full retirement age for Social Security is now 66 for people born in 1943 to 1954 and goes up to 67 for those born after 1960. However, for each year you delay taking the benefit past full retirement age, you get an increase of 8% in your benefit, until age 70. If you're healthy, it makes sense to delay taking the benefit until 70 to collect the bigger check, especially if you have a spouse who will benefit from an increased survivor benefit. A paycheck keeps the money coming in until you reach age 70.
Synchronizing retirement with your spouse. Enjoying retired life together is a good reason to retire within a year or two of your spouse. If you married someone a bit younger than you, consider keeping yourself busy by working a few more years so you’re not hanging around waiting for them to retire.
There’s lots to consider as you head toward retirement. As your situation changes, you should keep in touch with your estate planning attorney. Changes in assets, family situation or the law can open up new planning opportunities. That’s why we at Family Estate Planning Law Group work with all our clients on an ongoing basis.
For more information about Family Estate Planning Law Group’s unique way of working with clients, explore our website and contact us to schedule your consultation today!
Reference: Kiplinger (January 2017) “6 Reasons to Work Past Retirement Age”