Do you plan to work after retirement? You might want to rethink this | Smart Change: Personal Finances

(Kailey Hagen)

Work helps us pay our bills for most of our adult life, so it’s no surprise that those struggling to save for retirement are turning to a job to help them get through this phase as well. of life.

According to the latest Retirement Confidence Survey from the Benefits Research Institute (EBRI), seven in ten workers say they expect to work in retirement, but some of them may be in for a nasty surprise. .

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The problem of working in retirement

Working in retirement can be a great way to supplement your personal savings, and it has other benefits too. It can give you purpose and an opportunity to socialize with others. But just because you want to work doesn’t mean you’ll be able to.

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Nearly half of all retirees surveyed by EBRI said they retired earlier than expected, and only around 40% said they did so because they could afford to retire . Many more have been forced out of their jobs due to issues such as illness, downsizing or care demands.

If you’re just working to pass the time or get out of the house, an unplanned early retirement might not be so bad. But if you relied on your job to help cover essential expenses, losing it could be a devastating blow. Without it, you’ll be forced to withdraw your retirement savings sooner than expected, possibly running out of money.

Planning now is key

If you want to stay financially secure in retirement, you should save as much as you currently can, even if you never want to quit your job. Start with a workplace retirement account or IRA and set up automatic contributions so you don’t have to remember to put money aside on your own. If you have a 401(k) that offers a match, do your best to claim the full match each year.

Make paying off your debt a priority if it’s getting in the way of saving for retirement. Examine balance transfer cards or personal loans for high interest debt. Or you can try the avalanche method. This is where you make the minimum payment on each of your credit cards each month. Then you put any extra money on the card with the highest interest rate first. When that’s paid off, you move on to the card with the next highest interest rate, and so on.

Try to estimate the cost of your retirement so you know how much you need, and don’t forget to factor in your social security benefits as well. You can get a rough idea of ​​this by creating a my Social Security account and using the calculator there. Subtract your expected Social Security benefits from the total cost of your retirement to determine how much you need to cover on your own. Try to save as much as you can so you don’t depend so much on a job in retirement.

Have a backup plan in case something goes wrong

You can still work in retirement if you wish, but you should have a plan for what you will do if you have to retire unexpectedly. Depending on your job, even if you can’t be in the office full-time, you may be able to work part-time or remotely. Or you could look for another job if you lose yours. Keep your job skills up to date as you get older to increase your chances of finding a new position.

Hopefully you won’t have any problems and you can retire whenever you want. But if something does happen, you’ll be glad you prioritized saving when you were younger and have a backup plan.

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Maria D. Ervin