Once the lacks economy recovers, a possible labor shortage may cause employers to entice their experienced workers not to retire or to come out of retirement. While such a scenario seems unlikely with unemployment near 9%, this may seem unlikely but demographics make the US ripe for a labor shortage and ripe for retirement options for income. This can be a boon for those about to retire or already retired - a way to beef up their retirement savings. If such an opportunity does present itself, consider how you could benefit.
Is working again a retirement option?
If your projected retirement savings are less than satisfactory, then plan to work longer. But if you don't need to work, consider what may entice you to work- perhaps part-time. With the possibility of employers' need to retain about-to-retire employees, you may be able to propose an acceptable part-time position as a retirement option for yourself while collecting some or all of your pension benefits.
Consider what level of working would allow you to accommodate your social plans - along with your spouse's - in retirement.
Possible retirement options for working longer if not yet retired
Highly valued incentives for continued working from a recent study include:
- Receiving a full pension while working part time;
- A pay increase;
- Continuing company-subsidized health insurance at the same level as full-time workers, and
- Receiving a partial pension while working part-time.
Social Security considerations
Clearly, if you're going to be working you'll want to delay beginning your Social Security at least 'til your full retirement age - and perhaps longer. This is a good retirement option because delaying the start of your retirement benefits will increase your monthly payments.
Working full time and delaying Social Security benefits, will likely maintain your current tax status. But if you're working part-time and collecting pension benefits, your taxation rates may be a little lower and give you a little more bang for a buck earned. Additionally, consider the retirement option of working just up to the social security threshold so that you get the best of both worlds as explained below.
If you are younger than full retirement age, there is a limit to how much you can earn and still receive full Social Security benefits. If you are younger than full retirement age (age 66 for most) during all of 2011, SSA will deduct $1 from your benefits for each $2 you earned above $14,160.
If you reach full retirement age during 2011, SSA will deduct $1 from your benefits for each $3 you earn above $37,680 until the month you reach full retirement age. After age 66, there is no deduction no matter how much you earn.
Maintaining a working income may not only relieve pressure to draw on retirement savings, but it's a retirement option that may allow you to make more retirement contributions. Your working income allows you to continue contributing to your retirement plans (401(k), etc.) and IRAs. If you can get 'employer matching' contributions, then even better.
How long should you work in retirement
Of course you don't have to work 'til you drop although that's a retirement option that many prefer-keeping busy. But as our life expectancy has increased, we've added more vigorous years to our lives. So we can work longer but still fully retire while our activity levels are high. And working longer allows us to beef-up our eventual benefits from Social Security and savings.