Working a second job in retirement can be a good way to make savings go further. It can also make retirement more fulfilling.
About 70 percent of experienced workers plan to keep working in retirement, according to a 2014 study sponsored by AARP
. A small percentage (5 percent) of people plan to start a new career or start their own business (13 percent). Slightly less than a quarter will be doing it for the income. About a third will work for the enjoyment.
Many people continue to work in retirement because of the social satisfaction of getting out and being with other people and doing meaningful work.
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A Merrill Lynch study that looked at the types of work retirees
are considering found that retirement is increasingly not likely to mean the end of work. About 72 percent of "pre-retirees" age 50 and older said they want to work in retirement, according to that study. Reasons for this trend seem to point to more than just recent economic challenges. Retirees and those getting ready to retire are also considering increasing life expectancies, the fact that most people are forced to fund their own retirement instead of being able to rely on a pension, and a generation that views retirement as a time to fulfill dreams and find new purpose.
An important factor to consider when planning to work after retirement is how the income may affect your Social Security benefits
. While you can work with no income restrictions after the full retirement age, if you plan to retire early your benefits will be cut.
For people born before Jan. 1, 1955, the full retirement age is 66. While you can apply for Social Security benefits at age 62, the benefit will be lower than if you wait until full retirement age – and the check you receive could be reduced based on any income you receive.
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The deduction from Social Security benefits starts for income earned over $15,720. The Social Security Administration will deduct $1 from your check for every $2 over that amount you earn in a year – until that full retirement age is reached.
Different rules apply for those who plan to work outside of the country.
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