Last October, the MetLife Mature Market Institute reported that the over-55 workforce will represent almost 93 percent of the net increase in the U.S. civilian labor force between 2006 and 2016. MetLife also reported that many American workers plan to stay on the job until “at least” age 69.
The Pew Research Center’s Social & Demographic Trends Project in May 2009 noted that just over half of working adults aged 50-65 plan to delay their retirement, with 16 percent saying they never plan to stop working. The recent economic downturn was noted to be a significant factor in these findings.
For every retiree or potential retiree who feels they need to return or stay on the job, it’s important to regularly review their investment, insurance and tax issues, preferably with a certified financial planner.
Points to address include how current are your skills? The best job candidates are those with current skills in technology and industry-specific procedures, which may mean retraining. If there’s a way to get an employer to pay, do it. If you have to pay for it yourself, decide if your earnings will justify it.
Consider workplace demographics. While age discrimination is illegal, in some workplaces, older workers seem out of place. Decide whether you are going to be happy staying in a field with mostly younger workers with different interests or if you should try another line of work.
Determine how a job will affect you personally and socially.
There are many “positives” to re-engaging in the workplace, but review the potential downsides as well.
Consider health insurance. If a retiree returning to the workforce is already receiving Medicare or is covered by a “Medigap” policy, they may be able to lower their costs or improve their coverage by accepting employer group coverage as the primary underwriter of their medical expenses. Since people over age 55 are generally the greatest users of the healthcare system, coverage issues are particularly important to discuss with a financial planner.
Know your tax picture. Consider how a full or part-time income will impact your finances. It doesn’t take much income to put you into a higher bracket. Look for ways to control the taxes you’ll ultimately pay, including continued participation in qualified plans and other tax-preferred accumulation vehicles.
Consider your retirement payments: Determine how a new paycheck might change the way you draw on your retirement investments. Review the rules about working and drawing Social Security before your normal retirement age with your financial planner, as you may jeopardize benefits without proper planning.
Look for work-related incentives. There are opportunities to return to state employment and actually augment existing pensions. Keep an eye out for these programs and see if they work for you.
Keep saving. If you return to the workplace, see what you can do to take advantage of your new employer’s 401(k) plan or any other tax-advantaged retirement savings benefit, particularly if an employer matches your contribution. Don’t miss a chance to enhance your retirement savings.
Karin Grablin, an investment adviser with Dictor & Martin in Sarasota, can be reached at (941) 906-7222 or firstname.lastname@example.org.