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Work A Bit More and See the Benefits!

Happy-old-couple“Working into the second half of your sixties (or even longer) can mean a happier, more financially secure retirement when you finally leave your job.”

Kiplinger’s recent article, “6 Reasons to Work Past Retirement Age,” provides us with some good reasons for working a few more years.

Employee Benefits. The added fringe benefits you receive with your paycheck can be worth hundreds or even thousands of dollars. These are things like your employer-paid life insurance and employer contributions to your 401(k). Don’t forget about health insurance, which can be cheaper than Medicare and provide better coverage. This coverage is valuable, if your spouse is younger than 65 and covered by your plan.

A Larger Pension. If you're fortunate enough to have a pension, you may get a greater payout by working a few more years. Pensions are based on your salary and years of service. Some calculate the benefit on your average earnings over the last three or five years of employment.  Others base it on your average earnings over all the years in which you've participated in the plan. If your income is still increasing, your pension benefit could be better for every year you work.

You Enjoy Working. Many folks enjoy working, especially for the relationships, recognition and  sense of fulfillment. It provides people with purpose and structure. If you’re not sure how you'll spend your retirement, maybe you should keep working until you do.

A Nicer Nest Egg. You need to have enough in retirement savings to last 25 years. If you think you won’t have enough savings and income, working longer is a wise solution. When you keep working, you'll have fewer years before you’ll need to dip into savings, and you can keep saving in your retirement accounts. Even if you don't invest further, it’s still tax-deferred growth.

More Social Security Benefits. The full retirement age for Social Security is now 66 for people born in 1943 to 1954 and goes up to 67 for people who were born in 1960 or later. However, for each year you delay taking the benefit past full retirement age, you get an increase of 8% in your benefit, until age 70. If you're healthy, it makes sense to delay taking the benefit until 70 to collect the bigger check, especially if you have a spouse who will benefit from an increased survivor benefit. A paycheck keeps the money coming in until you reach age 70.

Teaming with Your Spouse. Most couples would like to retire within a year or two of each other to enjoy life together. If your spouse is much younger or not ready to retire, you can work several more years instead of being home alone.

Reference: Kiplinger (January 2017) “6 Reasons to Work Past Retirement Age”

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