Considerations of working after you retire
If you are thinking about retiring but still earning a living after you “make the announcement” what can you do to supplement your income and still me the rest of your objectives?
Encore Career in Real Estate
First lets talk about some objectives that may apply to you and your retirement:
1. Do something you love to do (so its not “work”) After all, if you love what you do to earn a living, you will be never work a day in your life. Remember, it’s only called work if you would rather be doing something else
2. The schedule must be flexible, allowing you to travel, spend tine with you wife, your grand kids and your hobbies. The alternative to a flexible schedule is to arrange a career with a trusted partner, so when one of you is traveling , the other is “on call” to handle things.
3. The expenses of this encore career have to be eclipsed by the income, If you become a commissioned sales person, for example, there is travel, advertising, wardrobe and office expenses.
4. Earn money “while you sleep”. To accomplish this you have to work “on your retirement business” not in it.
5. Do something you have a passion for so the rewards are more than the income.
6. An Encore career that keeps your mind and your wallet full.
7. An Encore career that will make you want to get up and out of bed in the morning – with a smile.
You may want to add or subtract from the objectives list above, in fact, make your own list and adjust it as your needs and awareness of the possibilities change, At the bottom of this post are some comments about the financial considerations of an encore a career, please reveiw them as well.
Potential Encore Careers
1. Writer I love this one. You can write reviews of products for internet sites, magazine articles about your key interests, or, heaven forbid, a book. If writing is your thing, go to sites like www.iwriter.com, and www.upwork.com and look for writing jobs.
2. Commissioned Sales Rep. As an independent contractor you will be your own boss, set your own hours, and work as hard or as little as you wish. Think real estate and insurance – ( both require licenses but are relatively easy to get.) But there are others.
3. Retail Sales. Many stores like having part time sales people with an expertise in their type of product. Generally retail hours are not attractive but 20 hours a week may be just the thing to take the economic edge off your wallet.
4. Bookkeeping. An at home career in bookkeeping may be down your alley, and you will fins there a re many businesses that could use the extra help.
5. Income producing websites. Definitely an “earn while you sleep” proposition, these are easier to set up than you might think. there will be an initial investment of time and money. For an example see www.todaysmonitors.com The key here would be do create or buy a site that dovetails with a passion you may already have. Visit www.flippa.com for some ideas on buying a website that makes money.
6. School Bus Driver. Like the kids you will get the summer off and during the school year yo get to spend time with high energy folks.
7. Consult in the industry you just left. After all you are an expert aren’t you? Start by contacting the companies in your local area that are in your business and let them know you are available for project work.
8. Volunteering. No money, but great rewards. And networking.
What financial issues should I consider if I return to work?
Going back to work may bring you more income, but it also involves new expenses such as transportation, food, work attire, and childcare if you have dependents. Your new income will be subject to income and payroll taxes, and combined with your existing income, may alter your tax situation. In addition, your new income may also affect your Social Security benefits.
You won’t know for sure how going back to work might affect your finances until you crunch the numbers and do some “what-if” planning.
Lastly, don’t hesitate to get help from your tax or financial professional to deal with the more complex tax and retirement benefit implications.
Will my Social Security benefits be reduced if I return to work? Whether your Social Security income is reduced depends on your age. For benefit purposes, the Social Security Administration (SSA) defines the full or normal retirement age (NRA) as between 66 and 67 for people born in 1943 or later. If you haven’t yet reached your NRA, working could reduce your Social Security benefits.
Consider the following: If you go back to work before reaching your NRA, $1 in benefits will be deducted for every $2 you earn above the annual limit (which is $15,720 in 2015).
EXAMPLE: You retire early and go back to work before you reach your full retirement age. In that time you earn $30,000 in salary. Because you are $14,280 over the annual limit, your Social Security benefits are reduced by $7,140. If you go back to work the year you reach your NRA, $1 in benefits will be deducted for every $3 you earn above a higher limit ($41,880 in 2015), but only counting earnings before the month you reach your NRA.
EXAMPLE: You work all year and reach your full retirement age in June. From January 1-May 31 you earned $15,000. Because your earnings are under the limit, your Social Security benefits for the year are unaffected.
EXAMPLE: You work all year and reach your full retirement age in June. From January 1-May 31 you earn $50,000. At this point you have earned $8,120 over the annual limit, which reduces your Social Security benefits for the year by $2,707. Starting the month you hit your NRA, your benefits are no longer reduced no matter how much you earn. Note: Any reduction in benefits due to the earnings test is only temporary, analogous to “withholding.” You will get the money back in the form of a higher benefit at full retirement age, so we don’t believe most people should be concerned about earning too much.