Working in retirement

Retirement doesn’t mean you have to stop working.

There are many reasons why retirees choose to work. Some do it as a way to stay active. Others work to supplement their incomes.

Whether you take on part-time work, start a second career or become self-employed, extra years of work can help extend your retirement savings.

Here are some things to consider if you’re planning to re-enter the workforce:

Social Security

Medical insurance and Medicare


Retirement accounts

Becoming your own boss

Social Security

Returning to work after claiming Social Security retirement benefits may cause a reduction in your payments if you haven’t reached full retirement age. Full retirement age ranges from 65 to 67, depending on your year of birth.

For 2018, Social Security benefits are subject to an earnings limit of $17,040 if you’re under full retirement age. Your payments are then reduced $1 for every $2 you make over the limit.

If you reach full retirement age in 2018, the payments will be reduced $1 for every $3 you earn over $45,360 until the month you reach full retirement age. You can then work without any reduction in your monthly benefits, no matter how much you earn.

Medical insurance and Medicare

If you retire before age 65, you’ll need to cover your insurance costs until Medicare kicks in. A job in retirement may come with medical benefits, but if it doesn’t, the extra income you’re earning can help defray insurance costs.

Working after age 65 also has benefits, specifically when it comes to Medicare. If you’re not working and you don’t enroll in Medicare Part B (the medical insurance portion) when you’re first eligible, your monthly premium increases by 10% for each 12-month period you were eligible but did not enroll.

However, you can avoid the 10% increase if you or your spouse is covered by a plan at work when you become eligible. In this case, you can enroll at any time while covered by your employer’s plan or during the eight-month period that begins with the month your group coverage ends or the month employment ends (whichever comes first).


If you’re going back to work after retirement, plan carefully to minimize taxes. The combination of your salary and the income from Social Security or a retirement account may push you into a higher tax bracket.

Retirement accounts

If your new employer offers a salary deferral plan, take advantage of it. Even if you’re in your 60s or 70s when you go back to work, another 10 years of compounding gives you the opportunity to boost your retirement account.

Remember that many employers have a waiting period before you can contribute to a company-sponsored retirement plan. The plan may have a vesting schedule, as well.

If you’re at least 70-1/2 or will be soon, ask your employer how the plan handles required minimum distributions. You might not have to take RMDs from the plan while you’re employed.

Becoming your own boss

Are you considering going into business for yourself? Think carefully before using your retirement savings to fund it.

Taking out a lump-sum distribution to finance a business could push you into a higher tax bracket. You might also find yourself exhausting your retirement reserves.

Instead, consider looking for financial help from the Small Business Administration or other lending organizations. They may also be able to help you research your market and develop a business plan.

Talk with your financial professional to plan an effective use of your retirement assets while you go back to work.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.

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