According to a recent American Advisors Group poll, one-third of seniors want to work far above their retirement age or, in some circumstances, forego retirement entirely.
While the majority of the respondents in AAG's poll are motivated by financial reasons, other seniors are choosing to work after retirement to maintain lifestyle flexibility.
However, when it comes to establishing a profession after retirement, additional elements might appear on your radar.
Will you want a more flexible work schedule? Are you aware of the tax consequences of working beyond retirement age? Will you continue working after retirement, or will you explore a new career?
Here are a few things to bear in mind while planning your job after retirement:
1. Determine how much of your income is taxable after retirement
If you continue to work after retirement, you must continue to pay federal income taxes. If you work beyond retirement, the mechanics of how your income is taxed will alter.While all job and self-employment income will be taxed for Medicare and income taxes, you should also consider how your Social Security benefits will be taxed.
However, if your total income is less than the standard deductions for seniors, you may have no tax payment.
If you get income or profits from your pension or assets while retired, they will be taxed as well.
As a result, it may be advisable to consult with an accountant to determine your after-tax income if you remained working after retirement.
2. Do you intend to stay in your current position or go it alone?
Another consideration is whether you want to continue working in your present field or explore a new one after retirement.After retirement, many seniors pursue second professions. It does, however, need careful preparation.
For example, you may need to retrain or seek finance to start your own firm.
If you want to leave your current company, you should consider rolling over your 401(k) (k). Most individuals who leave a job have four choices: keep their 401(k) in their current employer's plan, roll it over into an IRA, cash out their 401(k), or roll it over into their new employer's plan.
A 401k rollover may assist to decrease the tax you pay on withdrawals if you are preparing for retirement and want to maximize the tax advantages.
This is due to the fact that an IRA only enables tax-free withdrawals beginning at the age of 59 1/2, but a 401k allows tax-free withdrawals beginning at the age of 55.
Employees who are still working may also use their 401(k) to assist with the costs of moving to a new job after retirement, such as retraining, or to cover expenditures while starting your own company.
3. Take the time to figure out how much money you need to earn
The quantity of money you need to earn will be largely influenced by the kind of retirement lifestyle you foresee for yourself.Your retirement goals and the flexibility you want from your employment can help you determine how much you would need to earn post-retirement.
Your monthly income from your profession will decrease if you intend to work part-time or transition to flexible employment after retirement.
To augment your income during retirement, you will need to prepare ahead of time.
The amount you need to earn may also impact your career path beyond retirement, since a substantial need to earn may imply you must continue in your present profession to profit from the higher rates offered for your years of expertise.
Whether you wish to continue working for financial or professional reasons, planning ahead of time may help you prepare and make the move easier.
It is entirely up to you whether to continue working in a profession you like or to embark on a second career act.
