Whether by choice or to continue building up retirement savings, more Americans are continuing to work after retiring. Before you make that choice, you need to ensure it makes sense for you. Here are some things that are important to keep in mind if you plan to keep working after you retire.
The longer you are able to delay your social security benefits, the more you stand to make from them. If you continue to work after retiring, every year you are able postpone these benefits prior to your 70th birthday, your checks increase between 7% to 8%.
There is the chance that working after you retire may bump you into a higher tax rate. This is because taxes are owed on both your social security benefits and what you’re earning in your job. Once you hit 70, you will need to start making withdrawals on your IRA or 401(k) and will need to pay taxes on these too.
If you are retiring before age 65 and don’t qualify for Medicare, continuing to work may help cover some healthcare costs. If you are 65 and have Medicare, an employer medical plan may help offset some of those costs and help you save money.
You can continue to contribute to your retirement savings if you keep working. Once you hit 50, you can start making what are called ‘catch-up contributions’ which allows those closer to retirement to make more than the maximum contributions.
DISCLAIMER: This article is intended to be a helpful guide. If you have specific questions or concerns regarding your retirement, please reach out to a financial advisor.