Have you considered working during retirement? It’s not exactly something we want to think about for when we retire, but it might be what assists with helping to make ends meet. An article from The Motley Fool, “Most Older Americans Think They Won't Need to Work in Retirement. Are They Right?”, discusses the reasons why you may want to contemplate working in some capacity during your retirement.
On average, retirement costs $828,000. Retirees face many expenses and life expectancies are increasing, so while this number may feel large, it certainly makes sense. Consider if you had a 401(k) with $600,000 in it, that’s a lot of money right? Maybe not as much as you think. If you do some calculations and you apply the 4% withdrawal rate, this comes out to $24,000 a year or $2000 a month for income. Then factor in the average $1,400 or Social Security check each month. Social Security plus the 401(k) come out to an annual retirement income of $41,000. This may seem okay, but the typical retiree actually spends $46,000 annually on expenses, leaving a $5000 gap. This is not factoring in an intent to travel or partake in hobbies that might be more costly.
All these numbers point to the idea that you really should evaluate your nest egg, other income sources, and the lifestyle you will want to live during retirement. Will your current/future funds easily cover this lifestyle? Or should you maybe consider working?
Most incorrectly assume that they will be able to rely on Social Security, maybe that’s how it used to be, but with the ever-rising costs, it simply would not provide the funds you need to be at ease about finances.
Working in retirement doesn’t have to be a job that you hate. You could start your own business, consult in the field you are retiring from, or turn a hobby you love into something that would make money. Another plus to working in retirement aside from easing any potential burden is that it will provide you with a meaningful activity to do with your new wealth of free time. The part-time work will also give you the financial flexibility to travel and participate in hobbies that may require more outlays of cash. Not to mention, if you have grandchildren that you want to help financially in their futures with education, you will be able to do such without strapping yourself.
While there are many benefits to considering working during retirement, it is always best to work with an experienced estate planning attorney and other advisors to work out a feasible retirement plan that you will be satisfied and comfortable with. Working with an estate planning attorney is especially critical because there are many expenses of being a senior that you want to plan for like long-term care or the death of your spouse, and you don’t want any surprises that you do not have funds for that could drastically drain your retirement savings.
Reference: The Motley Fool (October 21, 2018), “Most Older Americans Think They Won't Need to Work in Retirement. Are They Right?”