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Work Is Not Evil

06/18/2013

I have a relative whose only ambition in life was NOT to work.  It was a negative ambition that I never understood. Sadly,it is also a “luxury” that fewer and fewer people have.

The Great Recession has many older Americans considering the prospects of staying in the workforce past their normal retirement age. But, working past your normal retirement age is not a new necessity. According to the Social Security Administration, more than 30% of individuals between the ages of 70 and 74 reported income from earnings from a job in 2010, the latest year for which data is available. Among a younger age group, those individuals between 65 and 69, nearly 49% had income from a job.
Some remain employed for personal reasons, such as a desire for stimulation and social contact; others still want a regular paycheck. Another new survey found 51% of baby-boomers expect to work after retirement.  Of those, 28% expect to work part-time and 18% want to start an entirely different career. Whatever the reason, the decision to continue working into your senior years will have a positive impact on your financial future.
Working later in life may permit you to continue adding to your retirement savings and delay making withdrawals. For example, if you earn enough to forgo Social Security benefits until after your full retirement age, your eventual benefit will increase by between 5.5% and 8% per year for each year that you wait, depending on the year of your birth. 
Depending on the circumstances of your career, working enables you to continue adding to your retirement nest egg. If you have access to an employer-sponsored retirement plan, you may be able to make contributions and continue building retirement assets. If not, consider whether you can fund an IRA. Just remember that after age 70 1/2, you will be required to make withdrawals, known as required minimum distributions (RMDs), from traditional 401(k)s and traditional IRAs. RMDs are not required from Roth IRAs and Roth 401(k)s.
Even if you do not have access to a retirement account, continuing to earn income may help you to delay tapping your personal assets for living expenses, which could help your portfolio last longer in the years to come. Whatever your decision, be sure to apply for Medicare at age 65. In certain circumstances, medical insurance might cost more if you delay your application.
Work doesn’t have to be a chore. You may find opportunities to work part time, on a seasonal basis, or capitalize on a personal interest that you didn’t have time to pursue earlier in life.  Most of all, don’t feel sorry for yourself.  There’s more to life than NOT working!

Oh, by the way, 6% of those planning to work after retirement just want to avoid being around their spouse.  Your bank account doesn’t care what your reason is . . . as long as you keep working!

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