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Fulton Bank

Should I work part-time in retirement?

Whether you're nearing retirement or you've already left the workforce, taking a part-time job is an option that deserves serious consideration. For one thing, part-time income can supplement Social Security benefits, to finance home renovations, help fund, travel, or other goals. On the other hand, working part-time could reduce the amount of your monthly social security check if you exceed a certain income limit.

Working part-time in retirement has its pros and cons, and making that decision is easier than you think. Take a closer look at how working part-time in retirement could help—or in some instances, hinder—your ability to live the retirement lifestyle you desire.

Consider these items to weigh the pros and cons. 

1. Stretch your retirement savings

If you've saved enough for retirement, but don't want to live entirely off savings and Social Security, income from a part-time job can make your savings last longer. Even working only a couple of days a week could bring in several hundred dollars to help pay for groceries, gas, dining out, and other everyday expenses so you can tap retirement savings less often.

2. Wait longer to draw Social Security

If you want to retire from your full-time job but wait a while longer to start drawing Social Security, taking a part-time job now could allow you to enjoy a bigger Social Security check later. That's because your monthly benefit will be reduced by as much as 30% if you start drawing Social Security at 62 versus waiting until your full retirement age. For example, for someone with a $1,000 monthly benefit at their full retirement age of 67, drawing Social Security at age 62 would shrink that benefit to only $700 a month.

3. Gain access to health insurance

If you retire before you're eligible for Medicare at age 65, you may still be able to receive employer-sponsored health insurance benefits as a part-time employee. Starbucks, UPS, Costco and Lowes are all companies that offer health insurance benefits to part-time workers who put in the required number of weekly hours.

Search online to find more companies offering full-time benefits to part-time workers. If you haven't retired yet and like the company you work for, ask management if you can work part-time and still receive health insurance benefits.

4. Make money, up to a point

Once you reach your full retirement age, you can earn as much as you like at a job or self-employment without having your Social Security benefit reduced. However, if you start drawing Social Security before your full retirement age and exceed the  annual earnings limit, the Social Security Administration (SSA) will deduct $1 from your benefits for each $2 you earn above the annual limit.  

Here's an example: For 2021, the annual earnings limit is $18,906. If you earn $22,000 additional income (outside of social security) in 2021, your annual earnings would exceed the $18,960 limit by $3,040. If your SSA benefit amount is $1,100 per month ($13,200 annually) it would be reduced to $973 per month and $11,680 annually ($1 reduction for every $2 earned).

During the year you will reach full retirement age, the earnings limit jumps to a higher amount —$50,520 for 2021 — and the reduction is $1 for every $3 you earn above the limit until the month you reach full retirement age.

The benefit reduction isn't permanent, however. Once you reach full retirement age, the SSA will recalculate and increase your benefit to compensate for the months when benefits were withheld.

5. Improve your health

The benefits of working part-time in retirement aren't limited only to financial gains. Working at a part-time job may also benefit your mental and physical health—potentially reducing health-related expenses—by providing social connections and a sense of purpose. Research suggests that having a variety of social ties may help reduce stress and heart-related risks and lead to a longer life, according to the National Institutes of Health.

6. Fund travel and other retirement goals

A part-time income may be just what you need to fund retirement travel dreams. However, you may want to find a job where your employer allows you plenty of time off to travel or even go away for a couple of months to be a winter snowbird. So, be upfront about your travel plans when you apply to avoid problems later.

Or if you want to increase retirement savings, earnings from a part-time job can add up quickly. Maybe you'd like to renovate your home with the money you make at a part-time job. Whichever way you choose to spend that income, the extra money can allow you to live a more comfortable retirement lifestyle.

Part-time can be a good time

Just because you're retired doesn't mean you have to clock out of the workforce altogether. If you like working and being around people, part-time work offers flexibility and a social network without all the stressors and pressure of a career.

Who knows? You may even find a part-time job that ignites a full-time passion for a new interest you didn't know existed— while earning enough money to enjoy a more comfortable retirement.

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