If your retirement plans are short on cash or long on time, consider a part-time job to ease the transition and delay the withdrawals from your nest egg.
Survey after survey continues to hammer home the fact that Americans simply aren’t saving enough for retirement. A full 71% of Americans say they are behind on their retirement savings plan, according to a new national survey by Experian and Get Rich Slowly.
Don’t despair. There is another alternative that could help you solve the retirement puzzle and still take the leap from the full-time workforce at your desired retirement age. That answer may be a part-time job.
The traditional face of retirement is changing, and that includes a transition phase from full-time work into quasi-retirement with part-time work. That could include consulting in your field, part-time work for a previous employer, or a complete 180-degree switch.
Turn your hobbies into a job. Perhaps a love for gardening could turn into a work at a local gardening center. Sports fan? Many sports teams hire workers seasonally or part-time, and could offer jobs like working in the front office or ushering spectators to their seats. Another option: explore Flexjobs.com, which lists jobs in 55 categories that have remote, part-time, freelance, or flexible work options.
In addition to the financial benefits, there are the non-tangible feelings of contributing to a greater goal, the opportunity to continue to use your professional skills, and simply to belong and have a place to go.
Generating a part-time income gives you options on the timing of your withdrawals in the early years of your retirement. A challenge that retirees may face is the necessity to withdraw funds from retirement investment accounts during down phases in the stock market. Having an income to fall back on can give you some options and time to weather the storm of a down market cycle. Investors will eventually need to start drawing down qualified assets once you reach age 70 1/2, as the government requires these minimum distributions (RMDs), but prior to that age, income from a part-time job can give you options.
A part-time income can give you wiggle room when it comes to splurge items. Do you want to renovate your kitchen? Spruce up the man cave in your basement? Or finally take that dream vacation to Europe? A part-time income can provide a cushion for extra spending on indulgences or luxuries without harming your overall nest egg.
A part-time income can help hedge against longevity risk. That’s the chance that you will live longer than expected and possibly run out of money. Continuing medical advances mean people are living longer. A man reaching age 65 today can expect to live, on average, until age 84.3, and a woman turning age 65 today can expect to live, on average, until age 86.6, according to data compiled by the Social Security Administration. And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95, the SSA says. No one wants to outlive their resources, and the longer you can continue earning income, the better.
Consider the impact on Social Security. If you plan to collect Social Security benefits prior to your full retirement age, there can be a reduction in benefits. The income limit for 2016 is $15,720, and Social Security will deduct $1 from your benefits for every $2 that you earn above that level.
The information presented is for informational and educational purposes only. Content presented is not an investment recommendation or advice and should not be relied upon in making the decision to buy or sell a security or pursue a particular investment strategy.
Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2023 Charles Schwab & Co. Inc. All rights reserved.