This year, about 75 million baby boomers began turning 70. Some are already retired, some see retirement on the horizon, and others are redefining retirement altogether.
The vision of traditional retirement is changing for many reasons. People are living longer and the savings game has changed with the shift away from pension plans. While your grandfather might have collected a pension in retirement, you’re more likely to have a 401(k), which places responsibility for saving and investing squarely on your shoulders. Still, some might not be ready to call it quits at 65, while others might not be able to, given their financial situation.
A recent New York Times article, Work a Little, Play a Little: A New Retirement Strategy, covered a new approach that includes leisure activities, supplemented by part-time, paid work and volunteer activities. It’s called “consulteering” and it could be another option to consider. With some Americans looking at more than a decade in retirement, this approach is an interesting way to use the skills nurtured over a decades-long career or dive into new interests. Whether you’re working as a part-time consultant in an industry you’re familiar with or driving the train around the Disneyland theme park a couple days a week, having an active income stream in retirement can be a big help — especially if you’re delaying claiming Social Security, which can increase your benefits by 6-8 percent for each year you delay claiming between ages 62 and 70. A little extra income can help you put off claiming Social Security a little longer!
What if you’re ready to start claiming Social Security benefits but still want to work?
Here’s an overview, and for a more detailed explanation, visit the Social Security Administration here.
You can collect Social Security benefits and work, but if you’re younger than your full retirement age and make more than the yearly earnings limit (for 2016 the limit is $15,720), they will reduce your benefit—only wages exceeding the limit count into the deductions. Retirement income from other retirement savings or investments are not counted.
Starting with the month you reach full retirement age, the Social Security Administration will not reduce your benefits no matter how much you earn.
One more benefit: working while retired (though that sounds contradictory) could even increase your Social Security benefits if you have gap years in your career because you’ll continue paying income tax into Social Security.
While consulteering might be living the dream for some, we know that your retirement vision is as unique as you are. We can help you get there. Find out if you’re eligible for Financial Engines’ services for help with creating a comprehensive financial plan to work toward your life and retirement goals.