Can You Keep Working After Retirement?
Like so many other big goals, retirement is hard to reach and even harder to maintain. With longer life expectancies, fewer financial supports from former employers and an ever-rising cost of healthcare, many of today’s retirees find themselves ready to go back to work.
Even when money isn’t a concern, some retirees are realizing that having nothing but time isn’t all that much fun. That may be why, according to the most recent RAND American Working Conditions Survey, 39% of people aged 65 and older working today were previously retired, and 56% of retirees age 50 or older say they would consider going back to work.
If you are retired and ready to make a change, there are a few things to consider before taking the leap back into the workforce. Here’s what you need to know.
Social Security and Working After Retirement
If you are receiving Social Security, working may result in reduced benefits. How much lower will depend on how far you are from full retirement age (currently 66 years old, although it may be older depending on your birth year). If you are younger than full retirement age, benefits are reduced by $1 for every $2 you earn above an annual limit. In 2023, the limit is $21,240.
In the year that you will reach retirement age, your benefits will be reduced by $1 for every $3 earned above the annual limit, which is $56,250 in 2023. This stops once your birthday month is reached. At that point, you can earn as much as you want and benefits will not be affected. Even better: your annual benefit will be recalculated at full retirement age, and you may receive a higher amount.
The rules are different for anyone working outside of the U.S. In that case, benefits are withheld for any month you work 45 hours or less if you’re under full retirement age, even if you’re self-employed, own your own business or have a work agreement but aren’t actually working.
Keep in mind, only income earned from work is deducted. Income from sources such as pensions, veterans benefits, annuities, or other investments are not included. To find out how much you can receive in benefits while still working based on your age, use the Social Security Administration’s Retirement Earnings Test calculator.
Taxes and Working in Retirement
You will also want to pay attention to how additional income affects how much tax you pay on your Social Security benefits. It all depends on your combined income or modified adjusted gross income (MAGI), which includes your adjusted gross income from wages, self-employment, and investment dividends, plus one-half of your Social Security benefits.
The equation looks like this:
Adjusted gross income + nontaxable dividends + 1/2 SSI benefits = combined income
If your combined income is less than $25,000 as an individual or less than $32,000 as a joint filer, no taxes are owed. If you make between $25,000 and $34,000 as an individual, or between $32,000 and $44,000 as a couple filing jointly, you may owe taxes on 50% of your Social Security benefits. $If you make more than that, up to 85% of your Social Security benefits might be taxable.
To pay taxes on Social Security benefits, you choose to have taxes withheld from your monthly income or make quarterly payments.
How To Look for a Job After Retirement
Possibly the most challenging part of working in retirement is finding the right job. Of course, theoretically, you should have as many job options as you did during your initial career years. But there is a chance that seniors will encounter some age discrimination during a job search.
One option is to start with your former employer or find consulting in the career in which you worked. The familiarity and expertise in your field can be a valuable asset. You might also reach out to your network of professional contacts for something similar on a contractor or part-time basis. To be sure, it also helps to let everyone you know you are looking for work. You never know where the next opportunity might come from.
If you are looking for something new, certain industries may be more open to hiring older people, according to research from the Urban Institute.Many of the most common jobs, including administrative assistants, teachers, lawyers, and bookkeepers, may require a college education. But there are also positions in retail and other sales, childcare, telemarketing, transportation and trucking, maintenance, and other areas where post-secondary schooling is not a must. You could also sign up with a temp agency and work different jobs until you find the fit for you.
Another option is to try freelance work through the gig economy. Many seniors participate in this digital-driven marketplace for goods and services, which offers flexibility and the freedom to make your own hours.
Finding Meaning in Work After Retirement
More and more retirees are attempting to get extra income doing something they love. This may mean looking for work in the nonprofit sector or finding projects within a community that’s meaningful to you. It may involve starting your own business or charity. It could mean exploring something fun you always wanted to do but didn’t have time for in your peak earning years, like working for a doggy daycare, a theater, or museum. You may decide to go back to school or train for something completely new and different you had never considered before. Learn more about finding meaningful work in retirement.
The nice thing about working in retirement is you have the experience to recognize when a job is right for you, and the freedom to move on when it’s not. Don’t be afraid to try many avenues before you find the right fit.
The information contained in this article is not legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law.