Working While in Retirement

One of the factors in retirement planning is deciding whether or not to work. Studies show that an increasing number of employees nearing retirement do plan to work at least some of the time during their retirement years.

There are obvious advantages to working during retirement. You earn more money and have to rely less on your retirement savings. That way there is potentially more income in the savings pool, and it helps those savings last longer.

One option is known as phased retirement. Some employers have begun to offer what is called a phased retirement program. This program allows an employee to receive all or part of their pension benefit when they reach retirement age while they continue to work on a part-time basis at the same company.

But there are also non-economic reasons for working during retirement. Many retirees work for personal fulfillment–to stay mentally and physically active, to enjoy the social benefits of working, or to try their hand at something new. The reasons are as varied as the retirees themselves.

If you're thinking of working during a portion of your retirement, you'll want to consider carefully how it might affect your overall retirement income plan. For example:

• If you continue to work, will you have access to affordable health care (more and more employers are offering this important benefit to part-time employees)?
• Will working in retirement allow you to delay receiving Social Security retirement benefits? If so, your annual benefit–when you begin receiving benefits–may be higher.
• If you'll be receiving Social Security benefits while working, how will your work income affect the amount of Social Security benefits that you receive? Additional earnings can increase benefits in future years. However, for years before you reach full retirement age, $1 in benefits will generally be withheld for every $2 you earn over the annual earnings limit ($15,720 in 2015). Special rules apply in the year that you reach full retirement age.

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Some of this material has been provided by Broadridge Investor Communications Solutions, Inc.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.
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