The Benefits of Working Later Into Life
Many of us think of retirement as a time to stop working and focus entirely on things like spending time with family, leisure, and travel. This definition of retirement is a great fit for some, but more and more people are discovering that working into later life offers benefits that are simply too good to pass up.
Today, people are living longer lives than ever before, and it’s not uncommon at all for someone to remain very physically fit and healthy into his or her 70’s and beyond.
While there are certainly other ways to enjoy this improved health, it provides ample opportunities for those who want to keep working.
There are a variety of reasons that may make it worth your while to keep punching that time clock later into life. Some of us, try as we might, haven’t saved enough money for a comfortable retirement yet. A reliable source of income, even if it’s only part time, can greatly improve this situation. Working just a few more years, earning some extra money, and delaying retirement benefits such as Social Security add up to a reliable path toward a financially secure, comfortable retirement.
Others choose to keep working because they enjoy it and find purpose and meaning on the job. There is also a growing body of research showing that older adults who keep working enjoy better mental and physical health.
Regardless of the reason, working later into life is an increasing trend. For instance, the number of Americans working into their 60’s, 70’s, and beyond has been growing rapidly over the past few decades and shows no sign of slowing down.
According to data released by the U.S. Bureau of Labor Statistics, the labor force participation rate for Americans aged 65 to 74 years old grew from 16.3% in 1992 to 26.8% in 2012; it’s projected to reach 31.9% by the year 2022. For Americans 75 and older, this number will increase from 4.5% to a projected 10.5% in 2022.
This guide will examine the benefits of working later into life and give you some ideas to consider when deciding whether it’s right for you. That said, it is not intended as financial advice – there are too many variables to consider to give you that advice, even if we wanted to. Ultimately, the decision as to whether or not you should keep working will come down to your unique situation and finding the right balance for your financial situation, personal feelings, and the feelings of your spouse, family and friends.
The Financial Benefits
According to a report from the Center for Retirement Research at Boston College, around half of American households are at risk of not having enough money for retirement if they stop working at age 66. These households will not have enough yearly income to maintain a standard of living similar to what they enjoy in their pre-retirement years. Although this conclusion may sound bleak, around 86% of Americans will have a financially secure retirement by working until age 70 instead. This difference is too big to ignore – a few extra years of work can have a dramatic, life altering impact on your retirement. Let’s look at why.
Delaying Your Social Security Benefits
Most Americans nearing retirement count on Social Security benefits as a source of income during their retirement years. Some may not know that if you wait until you reach full retirement age you will receive a larger monthly benefit. Between the ages of 62 and 70, your benefits will increase by 6.5%-8.4% per year for each year that you delay receiving them. For example, if you were eligible for $1,000 per month at age 62 but waited until age 66, you would now be eligible for over $1,300 per month; by delaying until age 70, you would receive over $1,700 per month. There are arguments for and against taking Social Security as early as possible, but most experts will tell you that if you are able to wait it’s a good idea to do so. This will help you to secure a bigger monthly benefit when you are a little older, which is important for your long-term financial security.
As you might have guessed, one of the best ways to avoid having to take social security early is to continue working. When you continue working and have a steady income, there is no financial need to apply for benefits early. You’ll be thanking yourself as you enjoy a higher monthly income and greater financial resources in your retirement years.
Keep Saving, Keep Earning Interest on Your Savings
In general, we earn more money as we gain experience and progress in our careers. Many people nearing retirement age are earning substantial incomes while maintaining modest living costs. This is the perfect formula for saving large amounts of money for retirement in just a few more years of work. Indeed, you could vastly improve your post retirement standard of living in virtually no time at all.
You’ll also earn more in interest from the savings that you already have because you won’t be making any withdrawals. As you’re hard at work, your money will continue working hard for you. Since your retirement savings will be their largest at this point of your life, this extra money may also end up being substantial.
More Money to Do the Things You Want to Do
Your retirement should be spent enjoying yourself. This may very well mean doing things that you’ve put off over the years. Now that you’re older with fewer obligations, you’ll finally have the time for the things you have been putting off. By working later into life, you’ll be more likely to have the financial resources to go along with this newfound free time, putting you in the perfect position to pursue whatever makes you happy.
For example, many people dream of traveling after retirement. Here are two scenarios you don’t want to face as a prospective traveler:
- You have the savings to finance your dream trip but fear spending it and leaving yourself with a smaller savings account than you are comfortable having.
- You simply don’t have the money at all.
In either case, working for a few extra years, on a part-time basis, can make a huge difference in your life.
The Health and Personal Benefits
We’ve outlined a few compelling financial reasons to continue working later into your life; there are many other benefits as well. These benefits include better health, a more active social life, the ability to continue trying new things and accomplishing your goals. Although these are not as immediate as earning enough money to achieve a financially secure retirement, they can have a dramatic impact on your quality of life.
Keep Your Mind Sharper and Your Body More Fit
While you may not appreciate the daily grind, there is growing evidence out there suggesting that working later in life improves your mental and physical health. According to Dame Sally Davies, the Chief Medical Officer for England, “Staying in work, volunteering or joining a community group can make sure people stay physically and mentally active for longer. The health benefits of this should not be underestimated.”
When you think about it this makes perfect sense. The human body is remarkably adaptable. When you force it to do work it will generally adapt by getting stronger. The same is true for the human mind, continuing to challenge it will keep it active and sharp. In the words of Gabriel Heller-Sahlgren of the Center for the Study of Market Reform of Education, “In the beginning when you retire, it might feel more like a holiday, but after that, we see more of a ‘use it or lose it’ effect.” You don’t want to lose it.
Maintain Important Social Relationships
Working isn’t just about money; we forge friendships and make bonds that become an important part of life. They might not expect it, but recent retirees often come to miss the social interaction and camaraderie that their jobs provided. These relationships may also be connected to our long term health.
Upon retirement, these bonds and friendships will inevitably change and perhaps even end. By staying on the job, even on a part time basis with reduced hours, you can keep them alive. Many find that continuing a career with reduced hours provides the best of all worlds – more free time, a continued source of income, and, perhaps just as important, the social interactions that help define our lives.
Working as You Get Older Lets You Try New Things
When debating whether to retire or continue working, you may instead want to take the opportunity to try your hand at a brand new career. If you spent your working years at job that didn’t particularly interest you but paid the bills, now is your chance to try an occupation that’s more rewarding in other ways. In fact, many older adults retire from a long career working in one industry and begin working in one that’s completely different and fulfills a personal interest. To give one example, there are many technology workers, such as engineers, who retire from industry into teaching math or science. They find the new career both challenging and incredibly personally rewarding.
If you have reached full retirement age, there’s less need to worry about the financial risk of switching careers. It can even be financially beneficial if you have a job where you get a pension.
More Time for New Accomplishments
If you have spent your professional life working in a field you enjoy then you may want to continue your career so that you have the opportunity to accomplish more. You can also use this as an opportunity to give back to the profession you love by sharing your wealth of knowledge with the next generation. If this is the path you choose, it’s more about building your legacy than it is about making more money. That said, making more money is a bonus as well!
Having an opportunity at the end of your career to give something back and help others can be very emotionally fulfilling. This is a popular option that many people choose.
Make the Right Decision for Yourself
For some people, the decision to continue working later into life is made easy by the fact that they need the money. If spending a few more years working can enable them to have the financial means to live life the way that they want to live it, then it’s usually well worth it.
For others, the decision comes down to how they want to spend their retirement years.
It all comes down to weighing the pros and cons of your situation. For an increasing number of older adults, the pros of continuing to work outweigh the cons, and thus this life decision is becoming more commonplace. It’s an important choice, and you definitely need to take your time and make the right decision for you.
Labor force participation projected to fall for people under age 55 and rise for older age groups, Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily
Why You Should Plan to Work Until Age 70, U.S. News & World Report
National Retirement Risk Index, Center for Retirement Research at Boston College
Working Longer May Benefit Your Health, New York Times
Keep on Working Into Old Age for the Good of Your Health, The Telegraph
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