Retirees have lots of opportunities to make extra money by taking on part-time jobs, starting a business and joining the gig economy. But staying in the workforce may not always be your best bet. Many retiree jobs sound better than they really are. For example, the typical Uber driver makes a median profit of $8.55 to $10 per hour, according to calculations by the MIT Center for Energy and Environmental Policy. But beyond that, there are a number of reasons not to work after you retire:
You may already have enough money. While most baby boomers aren’t millionaires, they typically have saved at least something for retirement. According to an Insured Retirement Institute survey of 800 Americans ages 54 to 70, 58 percent of baby boomers say their retirement income will cover basic expenses and also afford some budget for travel and leisure. Furthermore, while our retirement portfolios were devastated during the recession, they are now more flush than ever since the stock market has rebounded to new highs.
You will spend less than you think. Unless you’re planning a grand trip to Europe, your living expenses will likely go down after you retire. If your income significantly declines, you will have a lower tax bill. And once you stop working, you won’t have to pay into Social Security. Your housing costs will decline once your mortgage is paid off, and you might qualify for senior discounts on your real estate taxes. You could also downsize from your family home to a less expensive place. Presumably you will not be supporting your kids. And don’t forget: You no longer have to save for retirement.
Working might not pay off. There are penalties for working later in life. For example, if you work after you sign up for Social Security benefits and you are younger than your full retirement age, some of your Social Security payments could be temporarily withheld. After age 70 1/2 you will be required to take minimum distributions from your retirement accounts, and if you’re also working, the withdrawal might kick you up to a higher tax bracket.
You don’t need the stress. Think about what you are working for. Perhaps your income is used to pay for a big house, to help your adult children or to pay for medical bills. But maybe if you’re not rushing off to work every day, you might have more time to take care of yourself and prevent health problems or decide you no longer need to live in an expensive neighborhood close to your job. Also, for people with physical jobs, continuing to work could be dangerous as you age. There’s no point in working just to pile up more money. At this stage of life, money, status and other vanities become relatively meaningless.
Continuing to work could strain your relationships. It can put a strain on your marriage if one partner continues to work while the other wants to retire. Think about how you will feel when your retired spouse or friends go on a fishing trip or a golf outing, leaving you behind to sweat it out for a paycheck.
Try something new. Many people spent a lifetime at a job that provided an income to support a family, but did not provide much personal fulfillment. Retirement is an opportunity to create a life that reflects who you really are. So don’t blow this chance. Play in a rock band, learn how to paint, write your family history or volunteer for your favorite cause. You are likely to find new ways to apply your skills and experience that are more rewarding than your old job.
It’s OK to do nothing. New retirees sometimes feel compelled to stay productive and chalk up more achievements. But if you’ve been working for 40 years, now is the time to kick back and enjoy life. Retirement is a chance, at last, to sit on the deck and read the newspaper. And there’s nothing wrong with that.
All this is not to say that you should give up your job without looking carefully at the numbers. Remember, you can still build up your Social Security benefit until age 70, and you’re not eligible for Medicare until you’re 65. You do not want to go into retirement without medical insurance. But still, for many people, the costs of working may outweigh the benefits.
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