Whether it’s to recoup your retirement savings or just enjoy your job, there are several financial benefits to continuing to work past full retirement age.
Why American retirees are returning to work
A new study from the Employee Benefit Research Institute shows the rate of return to work among retirees in the United States.
An estimated 55% of Americans feel unprepared for retirement. That may be one reason why so many older adults choose to remain in the workforce. Whether you work for someone else or run your own business, there are benefits to staying in a job for a long time.
For most Americans, the full retirement age (FRA) is approximately 67 years old, which is the age at which you can collect your full Social Security benefits. Here are some benefits of working beyond FRA, as long as you have the physical, mental, and emotional stamina to continue working.
No income limit
The earliest age you can claim Social Security benefits is age 62. While it works for many people, it’s important to remember that filing a claim early will permanently reduce your monthly benefit by 30%.
Additionally, if you continue working from age 62 until FRA, there is a limit to how much you can earn before the Social Security Administration (SSA) starts withholding a portion of your Social Security check. You’ll get that money back once you reach your FRA, but it can be annoying not to have access to it when you earn it.
Continuing to work after reaching your FRA means you can earn as much as you want without anything being deducted from your check.
Additional benefits
Consider some of the benefits of working beyond your FRA.
- There is additional revenue that can offset the budgetary impact of inflation.
- Whether you work for a company that offers an employer-sponsored retirement plan or are self-employed and have a 401(k) on your own, continuing to work can give you more time to build your retirement account.
- There is growing evidence that working through your FRA can help you maintain better health and even live longer. A 2016 study found that working one year past retirement age lowers the risk of death by 9% to 11% over an 18-year study.
It’s time to reconsider
Let’s say you’re 67 and claiming Social Security. As you continue to work, you realize that you can get by without Social Security benefits. You can ask the SSA to suspend your benefits within 12 months of being able to claim them. You’ll have to pay back the money you’ve received so far, but it might be worth it. That’s because once your benefits stop, you start earning delayed retirement credits. When your benefits automatically restart at age 70 (or sooner, if you decide to restart), your monthly Social Security check will be larger than the one you received at age 67. In fact, if you wait until age 70, your benefits will be about 24% higher.
Not everyone wants to work beyond their FRA, but if you think staying in the workforce is good for you, it’s good to be aware of how it can be beneficial.
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