Essential Facts About Employment in Your Post-Career Years
Working past the traditional retirement age offers a range of benefits and drawbacks for individuals, affecting their savings, government programs, and experiences of age discrimination.
Advantages
One significant advantage of working later is improved financial security and savings longevity. Continuing to work allows for ongoing income, reducing the need to draw down retirement savings and thereby extending their duration. It also enables further contributions to retirement plans, allowing for compounding growth and possibly receiving employer matches.
Another advantage is increased Social Security and pension benefits. Delaying retirement past the Full Retirement Age (usually 66 or 67) increases Social Security monthly payments up to age 70, maximizing lifetime benefits.
Staying employed can also provide access to health insurance coverage, dental, vision, and other perks that retirees without employer coverage may lose. This helps to bridge gaps before Medicare eligibility at 65 or avoid costly private insurance or ACA plans.
Non-financial benefits include alleviating boredom, providing social interaction, and offering a sense of contribution and purpose. Working longer can also help delay claiming Social Security and Medicare, enhancing benefits and reducing healthcare coverage gaps.
Challenges
Despite some easing, age discrimination remains a significant challenge, with about 74% of older Americans perceiving discrimination in the workplace. Continuing in demanding or service jobs past typical retirement age can increase stress, morbidity, and potentially shorten lifespan, especially for vulnerable groups like women in service roles.
Additional income from working might push retirees into higher tax brackets, reducing net income benefits. Also, commuting and longer working hours can detract from leisure time and family opportunities. Older workers may face fewer suitable job options or need to accept lower-paying or less desirable roles due to employer biases and market conditions.
A long working life can mean less time to relax or manage chronic conditions that often increase with age. Once you start Social Security, the government sets limits on how much you can earn, and work income can temporarily reduce your Social Security check.
Conclusion
Working past traditional retirement age supports savings by delaying withdrawals and maximizing government benefits like Social Security and Medicare, while also maintaining income and possibly reducing healthcare costs through employer benefits. However, age discrimination remains a significant challenge, and working longer may increase stress and reduce quality of life for some, requiring careful consideration of personal health, job conditions, and financial needs.
- Extending one's working life through defi finance strategies might help mitigate potential drawbacks, as it can offer additional streams of income and allow for more personal-finance optimizations, such as investing excess savings in defi products to generate higher returns.
- Late-career professionals should be mindful of potential personal-finance pitfalls associated with working past retirement age, such as increased tax liability or reduced Social Security benefits, especially if they exceed government-imposed income limits.
