Working into your retirement years

Older workers plan to work past age 65 because they need money and health benefits.

According to a 2011 study from the nonprofit Transamerica Center for Retirement Studies, more than three in five U.S. workers in their 50s and 60s say they plan on working past 65. Of that group, 47% say they will do continue working because they need the money or health benefits. 

For many older workers, the easiest option may be to continue with their current employer. But that will entail making themselves essential to that employer’s success. To attain the status of essential, workers should take on new projects when possible. It is also crucial to stay on top of the latest technology. Older employees can help to make themselves essential by putting their experience to use by volunteering to mentor younger workers either formally or informally.

Another option for older workers is a phased retirement program that lets workers gradually reduce their hours. There may also be job-sharing arrangements available. For instance, if you and a co-worker are both thinking of cutting back on your work hours, approach management with a plan detailing how you could divide your time and responsibilities. Just keep in mind that a change to your full-time status could affect your eligibility for benefits such as health insurance or a 401k match.

Some employers are known to hire senior citizens. AARP has a directory. Search for "National Employer Team." Some temporary-employment agencies, including Kelly Services and Adecco, specialize in placing seniors.

While you may need a steady paycheck to pay the bills, you will still need to save for when you eventually stop working. Workers age 50 and older typically can contribute an additional $5,500 to a 401k annually and an extra $1,000 to an IRA. You can also get a tax credit of up to $2,000 annually if you contribute to a retirement plan and make $55,500 or less (for joint filers) or $27,750 (for single filers).

You generally do not have to take required distributions from your 401k as long as you keep working for the employer offering the plan regardless of your age. But at age 70, you must start taking annual distributions from a regular IRA so make a plan to set aside or reinvest as much of those distributions as you can afford.

Hold off on taking Social Security benefits as long as possible; the longer you wait, the higher your monthly benefit will be. If you keep working, benefits are likely to be subject to federal income tax and may be further reduced if you take them before full retirement age. Finally, if you're using Medicare, keep in mind that your premiums are determined by your income.

To contact an expert in your area, visit MSU Extension expert search, or call 888-MSUE4MI (888-678-3464).

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