Working in Retirement? 6 Benefits to Consider
Does the thought of working past retirement age appeal to you? According to a 2016 study from the Pew Research Center, approximately 9 million Americans aged 65+ work part-time or full-time. If you are one of them, or are planning to be, then you are certainly in good company.
Of course, there are several reasons why someone may choose to work during retirement; and there are also many benefits associated with this decision. Let's discuss 6 key benefits to working in retirement.
1. Improved Mental Health
Several years ago a French study found that for each additional year of work, the risk of getting dementia is reduced by 3.2%. Simply put, the mental effort and agility required to stay in the workforce helps you to stay sharp, and even avoid or delay Alzheimer's disease and other conditions associated with aging. The old saying "use it or lose it" certainly applies to working in retirement.
2. Physical Benefits
It's no surprise that staying physically active in retirement will help your body to remain much stronger than a sedentary lifestyle would. Even retirees that volunteer on a part-time basis typically enjoy better health than their counterparts who are not so active. Of course, holding down a part-time or full-time job will definitely keep you physically active.
3. Financial Stability
According to a survey from the Insured Retirement Institute, only 24% of Baby Boomers feel confident that they have enough money saved up to live comfortably during retirement. When you consider factors such as inflation, rising medical costs, and the vicissitudes of the stock market, it's easy to understand why many retirees prefer to keep an extra source of income.
4. Increased Social Security Benefits
Many individuals that are able to take an early retirement decide to keep working, and thus increase their Social Security benefits when they finally reach full retirement age. In fact, once you reach full retirement age your Social Security benefits won't be impacted, no matter how much you decide to work. On the other hand, if you begin to receive benefits before reaching full retirement age (as defined by the Social Security Administration) then your benefits may be cut by up to 30% — and your spouse's benefits may be reduced by 35%.
Of course, it's a good idea to consult a financial expert during the course of your retirement planning to understand the potential tax consequences of working in retirement, especially when it comes to your Social Security benefits. However, the bottom line is that staying in the workforce until your full retirement age will likely mean better Social Security benefits when you decide to "hang up your spurs" for good.
5. Eligibility for Health Insurance Benefits
Healthcare costs rise higher and higher with each year, and many retirees are shocked to learn that Medicare only covers a portion of their medical expenses — or in some cases (such as most dental treatments), nothing at all.
For this reason, many retirees decide that it makes sense to maintain health insurance through an eligible employer, or take out Medicare Supplement Insurance for any gaps in Medicare coverage. Even part-time work that comes with an insurance plan may provide significant savings when it comes to healthcare. This is especially true if you want your spouse and/or other family members to be covered as well.
6. Emotional Benefits
There are several emotional benefits associated with working past retirement age. For instance, keeping to a structured routine can help you to maintain peace of mind. Finding a sense of purpose in your work may improve your quality of life, and even help to extend your lifespan. Staying mentally and physically active can help you to fight depression, and provide you with a sense of accomplishment.
In addition, staying part of the workforce often provides people with a social network/support system that they may not enjoy otherwise. Many retirees struggle with feelings of isolation and low self-worth. However, working as part of a team may enable you to forge meaningful relationships with your co-workers, and allow you to enjoy regular social interaction with others.
Planning for a Successful, Active Retirement
As mentioned previously, there may be a number of reasons why someone decides to keep working past retirement age. Some are purely financial; others involve mental, physical, and emotional well-being.
Whatever the case may be, it's always a good idea to seek expert advice on how to make your retirement a success. Reach out to our team of friendly professionals at Park Place Financial today for a complimentary financial checkup. We'd be happy to help you plan out your retirement so that you can truly enjoy your "golden years."