Exploring the Advantages of Part-Time Employment during Retirement
The notion of working in retirement may seem paradoxical, but it is not. Although you may have moved beyond your primary career, you should still devote a part of your week to some type of money-making activity. It is possible to round out your schedule and add satisfaction to your retirement through part-time, freelance, or consulting work. Furthermore, there are financial benefits as well. To that end, here are nine reasons to consider reentering the workforce.
Additional Financial Stability
In most cases, retirees have sufficient savings and income from their retirement plans to meet their basic needs. Nonetheless, inflation, long-term care, and rising medical expenses need to be taken into account as well. A survey conducted by the Insured Retirement Institute found only 18 percent of baby boomers are confident they will have enough money in retirement to live comfortably. Those who own an annuity, however, report 45 percent more confidence. In short, if you did not save enough money for retirement, you may need to continue working as you age. Even if it’s not, a paycheck goes a long way to supplementing and extending those savings over time.
Keeps Your Brain Healthy
Most people are unaware that their work may affect their mental capabilities after they retire, according to the University of Michigan’s Health and Retirement Study (HRS). “Your job can impact your cognitive functioning in later life,” says Amanda Sonnega, an associate research scientist at the Institute for Social Research (ISR). It has been found that retirement is associated with some level of cognitive decline even after accounting for other health changes associated with age. “In general, working seems to provide a level of cognitive stimulation that is protective against cognitive decline at older ages,” Sonnega says. “Researchers are looking at what it is about work that serves this role.” Part-time employment gives you the chance to switch jobs or roles, allowing you to take on new challenges and slow cognitive decline.
You’re Too Young to Enroll in Medicare
What happens if you’re retired but haven’t yet reached 65, the age at which you become eligible for Medicare? You may have to pay out-of-pocket for insurance or medical expenses. When seniors retire and no longer have access to a company-sponsored medical plan, the high costs of medical care can be quite shocking. The solution? Work for an employer that offers health insurance even to part-timers. You can save hundreds or even thousands of dollars every month by working part-time for a company that offers health insurance. Moreover, you may need to pay significant out-of-pocket expenses for prescription drugs once you qualify for Medicare. There are gaps in Medicare coverage that can be filled by additional health insurance through your employer or Medicare Supplement Insurance despite turning 65 and qualifying for Medicare.
Preserves Your Portfolio
The more money you earn in retirement, the less money you’ll need to take from your investments to pay for it. The length of your savings can even be affected by low-paying jobs. Suppose you earn $20,000 a year as a retiree working part-time. For 30 years in retirement, a $500,000 portfolio generates $20,000 per year using the 4 percent withdrawal rule. In most cases, it’s easier to earn $20,000 a year working part-time than to accumulate another half million. “By not having to pull from your portfolio, it allows it to grow,” says Karl Schwartz, a Miami financial advisor, and certified public accountant. “Your assets end up growing quite a bit longer in that scenario.”
Having a Sense of Community
The Harvard Study of Adult Development has found that retirement well-being depends on good-quality relationships. In retirement, the happiest participants replaced their old work relationships with new ones. Working regularly—whether full-time, part-time, or as a volunteer—creates an environment in which new interactions can be formed. Furthermore, studies show that a variety of social relationships—such as those you might find at a part-time job—can contribute to stress reduction, lowering heart-related risks, alleviating depression, and even extending your life.
It is Possible to Draw Social Security While Working
Did you know that you can work while drawing Social Security benefits without losing your benefits if you stay under the IRS earnings limit? As of 2023, the earnings limit will increase to $21,240 for workers younger than full retirement age. For each $2 earned over $21,240, the Social Security Administration (SSA) deducts $1 from your benefits. Earnings limits for people reaching full retirement age in 2023 are $56,520. For every $3 earned over $56,520, the SSA deducts $1 until you reach full retirement age. The earnings limit for those over full retirement age is not applicable for the entire year, however.
Eases Boredom
Here’s something that no one tells you about retirement. You’re probably going to be bored—especially if you retire early. However, it is possible to combat boredom after retiring by taking on new work. A retirement job may provide mental stimulation to retirees. Retirement can cause boredom when retirees are suddenly faced with long days with nothing to do. With a part-time job, retirees can still travel or spend time with their families while enjoying the excitement of working.
Gives You an Identity
A person’s job typically indicates how they contribute to their community. The ability to bring value to someone else is one of the benefits of having a part-time job. “You can build on your past experiences, your past skills and your past colleagues to look for that part-time job, or you can create your own new part-time job based on your interests,” says Sally Balch Hurme, author of Get the Most Out of Retirement. “Your enthusiasm for the topic or the area will put you ahead in becoming a successful employee.”
You Can (Finally) Get Creative
You can improve your health and reduce your risk of serious illness by staying socially active and exercising your brain. Engaging in creative part-time work that challenges your mind and body is the perfect outlet to remain healthy. Moreover, you can earn an income from your creative talents with a little effort. For example, now that you have the time, you can finally pursue your passions, like painting, photography, woodworking, or baking. A local shop selling your products can be very satisfying and a great way to make some extra money. Or perhaps Etsy would be a better place for you to sell your items online. Regardless, monetizing a lifelong hobby can become an exciting and lucrative part-time job.
In conclusion, part-time employment during retirement offers numerous advantages, both financial and personal. From providing additional financial stability and preserving your portfolio to keeping your brain healthy and giving you a sense of community, there are countless reasons to consider reentering the workforce in some capacity. Whether it’s to supplement your retirement savings, stay mentally sharp, or simply combat boredom, part-time employment can bring fulfillment and satisfaction to your retirement years. So why not explore the options available to you and embrace the benefits of working during this new chapter of your life?
