Lots of people are still working after the traditional retirement age. The Bureau of Labor Statistics states that the labor force participation rate in 2018 for those aged 65-69 was 33.0%, for age 70-74 was 19.5% and for those 75 and older was 8.7%. This month we’ll take a look at why so many people are working into retirement.
The most obvious reason to keep working is that your savings, pension and Social Security won’t pay for your desired lifestyle. But, there are a number of other reasons as well. For example, if you retire before you’re eligible for Medicare, getting health insurance from your employer is a big consideration. Many people also find their work rewarding and want to continue experiencing the personal fulfillment that work can provide. For many of us, there is a lot of social interaction at work and some people want to continue that. Sometimes people have a hobby or other interest that they want to pursue as a second career. One final example is people who just love what they do and want to keep doing it after retirement.
Now, if money isn’t the driving force for continuing to work, volunteer jobs can be a wonderful way to achieve many of the objectives listed in the previous paragraph. Some business executives join hospital boards and other management teams. Woodworkers might volunteer at Habitat for Humanity or similar organizations. Accountants might help seniors with their taxes. Teachers might continue as a teacher’s aide. And so forth.
If you do work for money, you need to be aware of the Social Security rules for working later in life. The Social Security Administration states that “in 2023, if you’re under full retirement age, the annual earnings limit is $21,240. If you will reach full retirement age in 2023, the limit on your earnings for the months before full retirement age is $56,520. Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits.” Restated, if you’re receiving Social Security benefits before your full retirement age (65-67 depending on the year you were born) and are working, your benefits will be reduced by $1 for every $2 you earn above the annual limit ($21,240). The formula is a little more complicated in the year that you reach your full retirement age. After your full retirement age, your benefits are not reduced, no matter how much you earn.
You can see that many of us need to or even want to work after retirement. If you’d like to see if you’re ready for retirement yet, or go over any other financial matter, we can discuss things in a no-charge, no-obligation initial meeting. Please visit our website or give us a call at 970.419.8212 to set up an in-person or virtual meeting.
This article is for informational purposes only. This website does not provide tax or investment advice, nor is it an offer or solicitation of any kind to buy or sell any investment products. Please consult your tax or investment advisor for specific advice.