Easing into Retirement
The sun is shining and a warm breeze blows in off the water. You gaze out over the ocean…or lake…or pond…and settle back into your hammock without a care in the world. That’s the retirement dream, right? And for some of us, it may come true — but not in the instantaneous, snap-of-the-fingers way you may be envisioning. You just might spend a little less time in the hammock and more time exploring new interests, or even…get ready for it…working. There are many reasons why someone would choose to ease into retirement. For some, it is a question of financial insecurity. For others, they may not feel ready to leave their job yet. Many retirees feel they are missing out on the social part of their former working life or want to continue to feel the thrill of problem-solving and using their expertise in a productive way. Whatever reason makes the cautious retiree decide to only dip their toes into retirement, continuing to work is generally beneficial for their bank account and well-being. When you are retired, but not ready for an exclusively hammock-dwelling lifestyle, there are a few factors to consider before working again:
Is it financially worthwhile to resume working? Consider your potential income after taxes and any additional expenses that returning to work could incur (gas, lunches, work-appropriate dress, equipment, unpaid training fees, etc.) and determine if the new income will boost you into a higher tax bracket or even eliminate any currently advantageous deductions.
How will any additional income affect your Social Security benefits? If you are full retirement age* or older, you do not have to worry about this, because any earnings will not affect your benefits. However, those between the ages of 62 and full retirement age will lose $1 of benefits for every $2 of earnings over $17,040 in 2018.
*Note: Remember full retirement age is gradually increasing. It is currently 66 years old, but if you were born in 1960 or later, the full age rises to 67 years old. While those factors could certainly be detrimental to the part-time retiree, there are others that are uniquely beneficial:
If you are close to age 70½ and going back to work, you may not need to take minimum distributions from your 401(k) or employer plan. This means your fund can continue to grow tax deferred.
If you want to start a business as a retiree, you have the benefit of time and experience, as well as the motivation in doing what you are passionate about. Be careful not to use your retirement savings to fund the business. Your expertise in the field should attract other sources to fund your venture.
If you decide to ease into retirement by reducing your workload to part-time hours, you may miss out on some hammock time, but there are many benefits that could more than make up for it when it comes to peace of mind. Make sure you know why you are going back to work before you make the leap.
Representative is registered with and offers only securities and advisory services through PlanMember Securities Corporation, a registered broker/dealer, investment advisor and member FINRA/SIPC. 6187 Carpinteria Avenue, Carpinteria CA. 93013, (800) 874-6910. Randall Wealth Management Group and PlanMember Securities Corporation are independently owned and operated. PSEC is not responsible or liable for ancillary products or services offered by Randall Wealth Management Group or this representative. CA Insurance License: #0727953.
This newsletter was prepared by Integrated Concepts Group, Inc. The opinions expressed in this newsletter are for general information only and are not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. The views expressed are those of the author and may not necessarily reflect those held by PlanMember Securities Corporation. Material presented is believed to be from a reliable sources and PSEC makes no representation as to it accuracy or completeness.