Five Underrated Benefits of Working in Retirement

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Are you retired but considering picking up a part-time job? You aren’t alone. The U.S. Bureau of Labor Statistics forecasts that 36% of people ages 65 to 69 will be working in 2024.

Some retirees decide to work part-time to add to their savings. Some simply miss the social connections they formed at the office. Whatever your reasons, there are many psychological and financial benefits to taking on some extra work when you are retired.

Quickly Build Your Nestegg

Guess what the most effective way for someone over fifty to grow their retirement nest-egg is. Here’s a hint: it’s by not saving more or cutting investment expenses. According to a 2019 Stanford study, working longer has the biggest impact on one’s standard of living in retirement.

The researchers arrived at this conclusion after parsing through real-world data from the University of Michigan’s Health and Retirement Study, which tracks thousands of people 50 and over.

Saving more is really effective when you are younger because your money has decades to compound. If you let $10,000 compound at 8% annually, you’ll have over $100,000 in the bank in 30 years. In contrast, if you only let that $10,000 grow for ten years, it will only amount to $21,000.

If you weren’t an early saver, not all hope is lost. The Stanford study reports these three eye-popping statistics about the power of working in retirement:

  • Working three to six months longer is the equivalent of saving an additional 1% for 30 years
  • Delaying the start of retirement from age 62 to age 66 could raise someone’s standard of living by 33%

The biggest reason that working is so effective is that it helps seniors delay claiming their social security benefits. Though most people take social security when they retire, you aren’t required to. In fact, you can save a lot of money and eventually collect bigger checks by forgoing social security for a few years.

Delay Taking Social Security

You can receive social security as early as 62 or as late as 70. But if you do decide to wait on collecting your check, your social security payments will grow by approximately 8% every year until you turn 70.

For example, if your benefits would have been $3,000 a month at 67, they will be $3,720 when you are 70. You can collect more than $8,000 a year (24% more) by holding off for a few years. In addition, once you start collecting social security, the amount is fixed for the rest of your life.

Supplement Your Healthcare

Retirees can face $285,000 (or more) in healthcare expenses and Medicare only covers a portion of the expenses. Many retirees pay out of pocket for Medicare supplemental insurance. But you could get the same benefits without paying by working at Starbucks.

Enjoy a lively atmosphere and chit-chatting with customers? Working as a Starbucks barista might be a great option for you.

Starbucks offers health insurance to all of its employees, including part-time workers, though you do have to put in some face-time to qualify. Starbucks requires you to work at least 160 hours in 2 months to be eligible, which works out to 20 hours a week.

Starbucks offers higher tier coverage at approximately $300/month for a family of three. A lower tier coverage would cost much less for a single person, but there would be higher out of pocket expenses.

If slinging coffee is not your thing, you have plenty of other options. Other companies such as Whole Foods, Lowes and Costco also offer health insurance to part-time workers.

Mental and Physical Health Benefits

Working keeps you mentally engaged, socially connected and physically active. It’s no surprise that several research studies confirm that working in retirement leads to being healthier and happier.

A 2016 study conducted by Oregon State University found that those who remained at work for even one year past 65 had an 11% lower risk of death from all causes. The study also found that those who described themselves as unhealthy had a better chance of living longer if they remained in the workforce.

People who work in retirement have less risk of developing Alzheimer’s and other types of dementia. A large-scale French study found that for each additional year of work, the risk of getting dementia is reduced by 3.2%.

Researchers looked at the health records of more than 429,000 workers, most of whom were retired shopkeepers or craftsmen such as bakers and woodworkers.

Nearly 3% had developed dementia but the risk of this was lower for each year of age at retirement. Someone who retired at 65 had about a 15% lower risk of developing dementia compared to someone retiring at 60.

Flexible Work Exists

Deciding to work after you are retired doesn’t mean you need to resign yourself back to a life of deadlines and bureaucracy.

It’s never been easier to find part-time or remote work, thanks to technology making jobs more and more distributed.

Tutoring English online, freelance writing and dog walking/pet-sitting are just a few ways to maintain a flexible schedule while also earning supplemental income.

At 56, Sally Rushmore began a commercial writing side-gig, writing the marketing brochures for various small businesses such as flooring companies. She explains, “Commercial writing allows me the freedom to travel, gives me two cities from which to draw clients and provides the finances to keep the kids in college.”

Working While Collecting Social Security

One caveat to working in retirement is, if you are already collecting social security and you haven’t hit your full retirement age (66 or 67 depending on when you were born), part or all of your benefit could be temporarily withheld. (There’s no penalty once you reach full retirement age.)

1 thought on “Five Underrated Benefits of Working in Retirement”

  1. I think even after achieving financial independence, I will still continue to work. One of the main reasons is what you have mentioned in regards to mental engagement. I want to continue to keep my mind active, and to continue to learn and grow.

    I think the brain is like a muscle in your body. If you don’t use it, it will deteriorate and you will lose it.

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