Retirement is a goal that many hard-working people cannot wait to achieve. For some, it’s carefree – filled with plenty of relaxation, travel and spending time with family and friends. For others, it can be a stressful, anxiety producing event, especially during times of high inflation.
Despite years of planning, many retirees, and even those who are preparing for retirement, are finding it difficult to spread fixed incomes thin enough to meet expenses, let alone pay for “luxuries”. This harsh financial reality has caused some workers to hit the pause button on their retirement plans, while others have had to become more creative in their approaches.
Should you stay or should you go?
Deciding when to retire can be a tricky proposition. First off, it’s important to understand your full retirement age as it varies depending on when you were born. If you elect to take your Social Security, or even a pension, before your full retirement age, it’s likely that your benefit will be reduced.
Many workers are deciding to delay retirement, either by necessity, or because they find it fulfilling to continue to work. A recent Gallup survey found that the average retirement age is 61, up from 57 in 1991. The age workers anticipate they will retire has also gone from 60 (in the 1990s) to 66, mainly because employees want to get the full Social Security or pension benefits that come with retiring later.
The pressure to return to work after retiring can also weigh heavily on some minds. According to a recent survey by the American Staffing Association, 31% of retirees stated they would be motivated to go back to work if inflation continues to rise. Approximately 14% of retirees are currently looking for work, while 43% felt that age would be a barrier for them to find employment. The availability and anticipated level of Social Security benefits were among the key concerns for those who were considering re-joining the workforce.
Help is on the way for retirees
For those who are already retired and concerned about Social Security benefits, there is some good news on the horizon! In January 2023, the Social Security Administration will be increasing payments by 8.7% through a Cost of Living Adjustment (COLA), which will equal approximately a $140 increase per month. While this may not be enough for some retirees to make ends meet, it will help many to take the edge off the financial strain.
Some Medicare costs will also be reduced, and some premiums will also be lower. Contact your Social Security or Medicare offices to find out how these changes may impact you.
While these monies may help ease some of the financial burden, it will still be difficult for many who live on a fixed income to keep pace while prices are on the rise.
If you’ve decided to re-enter the workforce after retirement, or plan to retire but wish to continue to supplement your retirement income, there are many options for you in the workplace.
Your best bet for employment could be with the very employer you retired from. Some retirees are able to negotiate a “pull-back” which means that you do the job you did previously but with less hours and likely less pay or benefits. Others turn to the gig economy as drivers, personal shoppers or providing delivery services.
Regardless of the post-retirement job you may choose, it is important to be mindful of income limits that you must adhere to if you wish to collect your full Social Security benefit.
Pros and cons of extending your working years
Many who have worked during retirement years have found tremendous benefits beyond the increased income, including:
- Easing boredom
- Fostering social connections
- Improving and maintaining cognitive functioning
- Promoting healthy habits and improving well being
- Providing a sense of passion and purpose
Working in retirement isn’t for everyone, though. It’s important that you weigh all of the considerations when making this important decision.
Whether you decide to keep working or fully retire, the choice is yours to make. Let us help you navigate the decision so that you can be confident you are doing what works best for you and your loved ones.
It’s as easy as talking to a Bankers Life agent and exploring your options. We can answer questions and help create financial plans. Click here to get started.