Many people are probably counting down the days until retirement. Next up is Barbara Levin of Northbrook, Illinois.
When Levine turned 70, she quit her high-pressure IT job and now works 16 to 20 hours a week at a women’s clothing boutique.
“I’m lucky that I don’t work for the money,” says Levine, now 76. “I work for the organization and the friendships between the women I work with and my customers.” Levine spends most of her salary on clothing for the boutique.
For people like Levine, there are many benefits to continuing to work past retirement age. This allows people to spend more from their nest egg when they fully retire. Delaying benefits significantly increases Social Security benefits.
Some of the most important benefits are not financial, but physical and mental. People who continue to work tend to live longer and have lower rates of dementia.
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That doesn’t mean everyone should keep working. Many people have demanding or unpleasant jobs that they simply cannot do or do not want to work.
Moreover, many Americans without sufficient retirement funds have little choice but to continue working past normal retirement age. Experts calculate that about half of Americans don’t have enough saved for retirement.
The employment rate of elderly people is trending upward. According to the U.S. Bureau of Labor Statistics, 26.6% of Americans ages 65 to 74 will be working in 2022, up from 20.4% in 2002. Among people over 75, 8.2% were working, up from 5.1%. Labor force participation rates are expected to continue rising for both groups.
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Whether or not to work after retirement age is not an either-or proposition. You may want to keep the same job, but work fewer hours or, like Levine, choose a lower-paying part-time job.
“We encourage people to keep working,” says Mr. Levine’s financial advisor, Ed Jelsen, of Northfield, Illinois. Working at a golf course is a different matter. ”
Another of Gjertsen’s customers is doing just that. Jim Murphy, 70, of Glenview, Illinois, works at a municipal golf course in the summer and at a municipal gym in the winter.
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Murphy, a former salesman for a packaging company, makes about $500 a month and says even that will help him make ends meet in retirement. He primarily enjoys the contact with other people that his job brings.
“You meet new people, you meet new people, you all joke around,” Murphy says. “It’s interesting to be a part of that.”
Here are four reasons why you should consider working into your late 60s or 70s.
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1. Reduce pressure on household finances
Every time you work, you’ll have a year to save money instead of depleting your portfolio.
“There are two benefits,” said John Crowell, 67, of St. Augustine, Florida. After selling his business and retiring from insurance agency, he began working as a real estate agent. “Money is growing, but years are shrinking.”
Mathematics is powerful. Alicia Munnell, director of the Center for Retirement Research at Boston University, said that when she retires at age 62, she estimates she will spend about a year in retirement, about the same as every two people in the workforce. If she retires at age 70, she will spend about one year in active service after retirement.
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“I’ve long advocated for people to work as long as possible,” says Muner, who is 80 and plans to work for several more years.
2. Social Security benefits will continue to increase
If you delay collecting Social Security benefits from age 62 to age 70, your monthly check will increase by at least 76%. Because of the way Social Security benefits are calculated, your benefits can increase significantly beyond that. Benefits are determined based on a maximum of 35 years of pay, adjusted for inflation, until age 60.
If you haven’t worked in 35 years or had years with little income, your benefits will increase even more rapidly. Because Social Security calculates benefits based on your average wage in the year you turn 60, many workers work past age 70 to reduce their monthly check because their pay naturally increases with inflation. This will be a permanent increase.
Mike Piper is a certified public accountant in St. Louis; free website To maximize benefits, we calculated benefits for a hypothetical 62-year-old worker who maxed out his Social Security contributions in 20 of his 35 years of service. For the remaining 15 years of her life, she earned 50% of her maximum Social Security income to 90% of her Social Security income.
If she retired today at age 62, she would receive $2,347 a month for the rest of her life, adjusted for inflation. If she continued to work and waited until her full retirement age of 67, she would receive $3,538 per month in today’s dollars. And if she waited until age 70, she would receive $4,516.
But even if you start receiving monthly benefits at age 70, your monthly benefits will increase a little each year if you continue to work full-time. Piper’s calculations show that by age 75, that would rise to $4,748 for him, a permanent increase of 5% over his benefit amount at age 70. If she continues to work until age 80, that increases to her $5,014, and after age 70 she increases by 11%. Piper guessed. In this example, her annual wage inflation is 3%.
3. Good for your health
Research has shown that long working hours are associated with longer lives and less dementia. A 2020 Lancet study on dementia found that countries with earlier retirement ages are seeing an increase in dementia rates.
Some jobs may require a lot of physical activity, which can be good for your health. However, even a sedentary job requires you to use your brain, which can help prevent dementia.
“It provides structure to your day,” says Boston University’s Manel. “It keeps you occupied and mentally active.”
The very act of getting up every morning and going to work can become a kind of fitness routine. Commuting often involves exercise. If you work in a large office building, you tend to spend more time walking than at home.
4. Work increases social interaction
Humans are social creatures, and isolation can take a toll. That’s good for you because many jobs involve interacting with other people.
“Continuous interaction with people makes your brain more active to fight depression and dementia,” says Carolyn McClanahan, a financial advisor and physician in Jacksonville, Florida. St. Augustine real estate agent Crowell is also one of her clients.
McClanahan says working longer is good for your marriage. “Many couples don’t plan what happens when each other is not working.”
She continues: “Everyone needs time to be alone and away from other friends. If one spouse is no longer working, they may demand more time from the other spouse.”
McClanahan says couples can spend too much money together. “When a couple spends 24 hours a day together, when one dies, the other is devastated.”
Email Neal Templin at neal.templin@barrons.com.
