Working part time during retirement is about getting the best of both worlds: an opportunity to continue earning along with the flexibility to pursue personal goals.
Opportunities to work part-time are becoming more plentiful as employers scramble to replace the large number of baby boomers now reaching retirement age. Fortunately for employers, many “retired” workers intend to continue working at least part time.
Many employers are rewriting employment policies to create opportunities for these retirement-age workers, including options for phased retirement, telecommuting, part-time work, and consulting.
Looking for work
While some people want to continue to work for the same employer or in the same field after retirement, others use part-time work to explore something different.
You can start your search by checking with the Human Resources department of your pre-retirement company, scanning online employment ads, contacting prospective employers, and exploring potential earning opportunities from hobbies and special interests.
The goal is to combine fulfilling work with the flexibility to enjoy your retirement. That way, both you and your prospective employers can reap the benefits of part-time work after retirement.
Financial considerations
A key issue for many older workers is how to balance retirement and health benefits with part-time earnings for maximum gain. Several issues should be part of the decision:
* Health benefits: If you retire after age 65, Medicare and a supplemental health plan may meet most of your needs. For early retirees, working part time may be a way to gain access to health benefits at a reasonable cost. Be sure to check your options before making decisions.
* Retirement savings: It’s always wise to have your own retirement savings to help insulate you from potential changes to your pension plan or other developments that affect your financial health. Part-time work may enable you to reduce the amount you withdraw from these savings, or even continue to make deposits.
* Taxes: If you’re already receiving a pension, part-time earnings can push you into another tax bracket or increase the percentage of Social Security payments subject to income taxes. Periodically review your estimated tax and set aside funds to reduce the impact at tax time.
* Social Security: Changes in Social Security laws make it possible for workers who reach full retirement age to receive full Social Security benefit payments even when they continue to work. Retirees who take early Social Security benefits still face limits on earnings, however, so check the Social Security Administration website to know where you stand (http://www.ssa.gov/pubs/10069.html).
* Pension payments: Most pensions are unaffected if you go back to work for a different employer, but problems can arise if you take early retirement with pension benefits and then continue to work for the same employer. Either way, be sure to check the pension impact with your employer or pension plan before accepting a part-time position.
If you have questions about retirement savings or other investment counseling, Liberty Savings is here to help. Call us at 201-659-3131, or ask questions at any branch to find out what free information and services we have to offer.
You can also contact our financial services advisor, Bob Dash with NorthEast Planning Corporation, our partner for full service financial planning organization. Contact Bob Dash directly at (908) 709-0020 Ext. 230 or robert_dash@nepusa.com.