Retirement Planning: 5 Benefits of Working Past Retirement Age

Whether you are living in the city or in our smaller town of Poughkeepsie, NY, retirement and retirement planning has always been to utmost importance to those who are ready to leave the workforce. But the rules are shifting. Labor force participation among those aged 65-74 is predicted to reach 32 percent by 2022, up from just 20 percent in 2002.1 As the Baby Boomer generation ages, more people are viewing retirement as an opportunity to enjoy the rewards of work in a whole new way as well as changing how they will invest in their retirement. If you’re considering working in retirement, here are a few reasons why it could be beneficial to alter your retirement plan to include working income.

Reason #1: Improve Your Mental Health

Doing things like learning a new skill can help maintain mental agility. Working, especially in a new job, is a great way to continue learning and improving your skill set. Staying engaged in work helps to build your “mental muscle.” This is an effective way to reduce the risk of developing dementia or Alzheimers as well as ward off signs of aging.

Reason #2: Maintain Physical Health

Staying active during retirement years is crucial for continued health. Whether you choose to work full time or volunteer a few days a week, engaging in some form of work will keep your body moving. This can give you opportunities to stay balanced, strong and healthy.

Reason #3: Continued Income & Delayed SS Benefits

One of the most important benefits is the longer you work, the longer you receive a steady paycheck. This, of course, can help boost financial stability and grow your savings. But in addition, working during retirement may afford you the ability to delay receiving Social Security benefits.

Social Security benefits become accessible at age 62, but full retirement benefits will only be available once an individual reaches their full retirement age, which is determined by their birth date. Any benefits received before reaching your full retirement age are reduced by a percentage, also determined by birth date, ranging between 25 and 30 percent.²   

Depending on your circumstances, working into retirement may mean being able to delay benefits until your full retirement age. If you want to maximize your benefits, you can receive a retirement credit up until the age of 70. This bonus percentage is determined by how long beyond your full retirement age you wait to begin receiving benefits.

 With there being a concern over if Social Security payments will be enough to survive on in retirement (as well as some panic it may not be there in the future), working past the age of retirement can help by increasing the investment in your retirement accounts such as your company 401k or Roth IRA. This can help to increase the amount of retirement income you will be able to live on once you decide to fully leave the workforce. 

Reason #4: Sense of Purpose

Studies have shown that a sense of purpose has been found to lengthen lifespan and quality of life.³ Working on something you care about, starting a new business or mentoring others in the workplace can ward off depression and provide a healthy sense of fulfillment and direction in your later years.

Reason #5: Avoid Isolation

One of the risks associated with retirement is increased isolation, which in terms of its impact on your health, has been equated with smoking nearly a pack of cigarettes a day.⁴ Working with others reduces this risk, giving you a chance to build connections and enjoy meaningful interactions.

There are a number of advantages to working past the normal retirement age which can lead to improved health as well as leading to a larger retirement investment. This new trend in retirement planning is also leading to new strategies that retirement advisors are creating to provide their clients with adequate investments for retirement. Developing a customized retirement plan to include the option of working beyond the normal age of retirement can help you to decide the right strategy for you.