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Working during your senior years doesn’t have to be just about income. The National Institute on Aging reports that those who participate in regular physical activity, stay connected through social events, and keep up with a hobby have shown signs of or have reported feeling happier and healthier. Working in your senior years can fit all those criteria. At BWM, we’ve watched many clients navigate the transition from a high-powered/high-stress job, to one to a position geared towards fulfilling a purpose, giving back to a community, or feeding an interest. A successful work/life balance in retirement is about understanding the options and building in flexibility.
The Benefits of Continuing to Work
As life expectancies get longer and new technologies improve healthcare, traditional retirement age is becoming less and less meaningful. Now, many people find themselves working into their senior years for reasons outside of just the income.
One aspect of retirement that doesn’t get enough attention until the time comes is the sense of purpose and independence derived from work. You may have been in the same role long enough that it feels like part of your identity. Stepping away from that career can be a mental shift that may take some time to get used to.
To add to that, a common complaint about being retired is the lack of social connection. Since many adult relationships are formed through work, leaving a job could mean leaving close friends. According to a survey from Age Friendly, it’s estimated that more than 60% of older adults who were still working interacted with at least 10 different people every day. When compared to retirees, only 15% of them interacted with the same amount. Many studies show that social interaction is a central part of a healthy lifestyle and a lack of it can cause physical and cognitive health to deteriorate.
From a financial aspect, continuing to work can have several different benefits-continued employer benefits, delaying social security resulting in higher future payouts (remember that Social Security will add 8% to that payout each year until age 70), continued savings and more.
Thinking it Through
The redefined retirement is not a state of being. Instead, retirement should be a transition point in life- the time when people shift from doing what they need to do to doing what they love. With the rise of remote jobs and side hustles, it may be possible to step back from full-time employment to work a less demanding job that can provide additional income. This can be especially rewarding if you choose to elevate an avocation into a vocation. Hobbies are generally things we love or find interesting, so looking for ways to give them the structure of work can be particularly rewarding.
For example, a recent retiree combined her lifelong love of dance with her desire to connect more with others. She contacted her local Montessori school and offered to teach a limited schedule of classes. Result: She’s made a host of new friends, is connected to her community in a new way, and has created a different dimension to her art.
The Social Security and Medicare Look-Out
If you’re already claiming Social Security benefits and are under age 70, you’ll need to be careful about how much you make in earned income as it may reduce your benefits. If you’re 70+, you can claim and continue to work, and it won’t reduce your benefits. In both situations, it will increase your income, so you’ll want to carefully review your financial plan to ensure you don’t push income over the limits that trigger a Medicare Part B surcharge.
Retirement is one of the most significant life transitions we face, and it has a different impact on every person. Continuing to work has its benefits and stepping away from the workforce has its own advantages. However, weighing the benefits and drawbacks of continuing to work, taking your own situation into account, and working with BWM to run through the numbers can help determine which route makes the most sense.