Many 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.
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.
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.
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.
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.
This material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all persons or entities. The tax information in this article is not intended to be used, and cannot be used, to avoid possible tax penalties. Neither TIAA-CREF nor its affiliates offer tax or legal advice. Taxpayers should consult an independent tax advisor for advice based on their own particular circumstances.
Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity and may lose value.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.
Our Mortgage Consultants can help you every step of the way, from determining how much home you can afford, through closing.