Some people pledge never to work again once their retirement kicks off. But there are plenty of good reasons to consider holding down a job as a retiree.
First of all, if you don’t have much in the way of retirement savings, income from a job could come in handy. You can use your paycheck to leave your nest egg as intact as possible so that your invested savings are able to grow into a larger sum. And if you can’t leave your savings alone, you can at least minimize withdrawals.
Working in retirement can also have non-financial benefits. Having a job to go to is a great way to stay occupied without having to spend money (other than what it might cost you to commute). And working might also do good things for your health. It could prevent you from becoming too sedentary, which could have negative consequences.
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But there’s another, lesser-known benefit to holding down a job in retirement that you should know about. And it might prompt you to go out and find work.
Your earnings in retirement might lead to a larger Social Security check
The amount of money you receive from Social Security each month is based on your personal wage history — specifically, the amount of money you earn during your 35 highest-paid years on the job. It’s possible to collect monthly benefits from Social Security and also collect a paycheck from an employer (or earn money from a non-salaried gig). And once you reach full retirement age, your job-related wages won’t put you at risk of having Social Security income withheld.
Meanwhile, it may be that among your 35 top earning years, some of those had you bringing home a very low salary. Maybe you were only able to work on a partial basis for a period of time. Or maybe you simply got stuck in a low-paying industry.
If you’re able to earn more money by working in retirement than you did earlier on in your career, you can replace some years of lower earnings with higher earnings. And from there, you might see your Social Security check increase.
To be clear, this can happen even if you’re already getting Social Security. Your monthly benefit is not set in stone and can change over time as you continue to earn income. (It can also change based on annual cost-of-living adjustments). So if you’re able to work and earn a decent amount of money, you might benefit not just from those paychecks, but from more Social Security.
Be careful if you haven’t reached full retirement age
The strategy of working in retirement could benefit you in many ways. But do be careful if you’re planning to get a job while you’re on Social Security and you haven’t yet reached full retirement age. At that point, you will be subject to an earnings-test limit, and wages beyond that limit could cause some of your Social Security benefits to be withheld.
But otherwise, don’t hesitate to go out and earn as much income as you can as a retiree. There’s clearly lots to be gained by going this route.
