Retirement Income: The Transition Into Retirement
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Phased retirement
Some employers
have begun to offer
phased retirement
programs. These
programs allow you
to receive all or part
of your pension
benefit once you've
reached
retirement age,
while you continue
to work on a part-time
basis for the
same employer. | |
Do You Plan to Work in Retirement?
Many employees nearing retirement plan to work for at least some
period of time during their retirement years. The obvious advantage of working during
retirement is that you'll be earning money and relying less on your retirement
savings — leaving more to potentially grow for the future and helping your savings
last longer.
But there are also non-economic reasons for working during retirement. Many retirees
work for personal fulfillment — to stay mentally and physically active, to enjoy
the social benefits of working, or to try their hand at something new. The reasons
are as varied as the retirees themselves.
If you're thinking of working during a portion of your retirement, you'll
want to consider carefully how it might affect your overall retirement income plan.
For example:
- If you continue to work, will you have access to affordable health care (more and
more employers are offering this important benefit to part-time employees)?
- Will working in retirement allow you to delay receiving Social Security retirement
benefits? If so, your annual benefit may be
higher than if you don't delay.
- If you'll be receiving Social Security benefits while working, how will your
work income affect the amount of Social Security benefits that you receive? Additional
earnings can increase benefits in future years. However, for years before you reach
full retirement age, $1 in benefits will generally be withheld for every $2 you
earn over the Social Security annual earnings limit. Special rules apply in the
year that you reach full retirement age.
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