This article was published in the New Haven Register on July 7, 2019.

Retirement planning has been described as a three-legged stool: The three legs are 1) investments in retirement accounts such as 401(k) plans (or a pension if you have one); 2) other savings and investments; and 3) Social Security.

For too many people these three legs will not produce enough income for a comfortable retirement. Perhaps they started saving too late, or they ran into a financial or career setback. That’s one reason more people are working after they retire. Other people, including some of my own clients, enjoy being productive, and their self-worth is closely tied to what they do. Regardless of the reasons, nearly half of Americans believe they will work past age 65, according to the Employee Benefit Research Institute.

However, planning to work after you retire can be a risky proposition. Many people become unable to work before they are eligible to retire: Nearly four in 10 American workers retire earlier than planned, usually due to health problems or job loss, according to the University of Michigan Health and Retirement Study.

Even if you are able to work, there are other factors to consider. For instance, if you claim Social Security benefits before you reach your full retirement age and then return to work, the IRS will deduct money from your Social Security check if you earn above a certain amount ($17,640 in 2019). You’ll lose $1 in Social Security benefits for every $2 you earn above the threshold, which changes every year, until you pass your full retirement age. (For the year you reach full retirement age the threshold goes way up, to $46,920 in 2019, and $1 is deducted for every $3 over the threshold, just for that year. There is no limit once you hit your full retirement age.)

As you can see, there are a lot of different factors that play into a decision to work past retirement, and a financial adviser can help you sort them out. Many people choose to work part-time, either continuing their previous occupation or striking out in a new direction. That provides the satisfaction of working while allowing you to enjoy plenty of leisure time, as well. Many people work part-time after they retire as a way to “ease” into the more relaxed retirement lifestyle.

If you want to keep some employment activity post-retirement as part of your financial plan, start by clarifying your reasons, since this can provide you with a clear direction. For instance, if you love your chosen profession, you might consider becoming a part-time consultant in your field. If you want to remain engaged with the community, consider seeking part-time work that has a social component. If you want to give back to your community, you might find work at a local nonprofit organization. If you want to travel, consider seeking a seasonal type of occupation.

It’s OK to plan on working up to or past retirement: Just be sure to have a “Plan B” in case you are unable to work for health reasons, job loss or any other reason.

Eric Tashlein is a Certified Financial Planner professional and founding Principal of Connecticut Capital Management Group LLC, 2 Schooner Lane, Suite 1-12, in Milford. He can be reached at 203-877-1520 or through www.connecticutcapital.com. This is for informational purposes only and should not be construed as personalized investment advice or legal/tax advice. Please consult your advisor/attorney/tax advisor. Registered Representative, Securities offered through Cambridge Investment Research Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors Inc., A Registered Investment Advisor. Cambridge Investment Research Inc., and Connecticut Capital Management Group LLC are not affiliated.

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