Retired and Working

A man in farmMany people who have retired end up returning to paid jobs, generally because they’re having difficulty making ends meet or they simply miss working. If you’re thinking about rejoining the workforce, here are a few steps to help ease the transition.

1. Understand the Social Security implications

Earning wages may temporarily reduce the amount of any Social Security retirement benefit you’re receiving. Eventually, however, you will have the opportunity to make up for any reduction in your Social Security benefit.

  • If you’re under full retirement age and collecting Social Security, your benefit will be reduced by $1 for every $2 in wages you earn over an annual earnings limit, which is $15,120 for 2013.
  • In the year you reach full retirement age, your benefit will be reduced by $1 for every $3 in wages you earn over a higher annual earnings limit than the one mentioned above; in 2013, this limit is $40,080. Only earnings for work performed before you reach full retirement age will count toward the limit.
  • Starting with the date you reach full retirement age, your earnings will no longer affect your Social Security retirement benefit. Also, from that point on, your benefit will be increased to account for amounts previously held back due to your earnings levels.

2. Get organized

With a new job, your time will be at a premium, and it’ll pay to be organized. Create a personal financial center at home to keep your family’s financial records at your fingertips. If possible, you may want to set this up in your home office or near your family computer for easy, online bill paying (if you pay your bills electronically). Consider keeping copies of important documents such as wills, marriage certificates and insurance policies in a safe deposit box outside of your home as well as in a secure safe at your house.

3. Plan your expenses

Your income might increase, but you should anticipate expenses you probably haven’t had in a while, such as commuting costs and new clothes for the job. Estimate how much these additional expenses will cost each month, then make any adjustments to your budget based on what you expect to earn and spend in the future.

4. Keep saving for retirement

If and when you begin a new job, don’t forget that you will probably stop working again at some point. If your new job offers a retirement savings plan, try to contribute at least enough to the plan to receive the full amount of any match provided by your employer. You can keep contributing to traditional IRA until the year you reach age 70½, when you must stop making contributions and start taking distributions. And you can keep contributing to a Roth IRA, regardless of age, as long as you have earned income.

One stop on the journey
As life expectancy beyond the traditional retirement age continues to increase, one stop on a person’s retirement journey may include a return to the workforce. With proper planning, this interval can significantly enhance retirees’ financial readiness for the rest of their retirement.

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