5 Reasons to Work During Retirement

Delaying retirement can significantly improve your retirement finances.

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Many people worry that they might have to work during retirement. Almost half of workers ages 50 to 64 say they may delay their retirement and 16 percent expect to never stop working, according to a 2009 Pew Research Center survey. Here are some reasons working during the retirement years may not be so bad.

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Employer benefits. By continuing to work, you can keep your group health insurance. Medicare becomes available when you turn 65, but it doesn't cover everything. Depending on your health situation, you may need to supplement that coverage with more health insurance. A group health insurance plan from your employer may offer additional benefits that traditional Medicare doesn’t provide. Your employer may also offer other benefits that make it worthwhile to work longer, such as an excellent 401(k) match or stock option plan that makes it hard to leave.

Travel opportunities through work. If you are lucky enough to enjoy free travel benefits through your employer, it might be worth it to you to stay on a few more years to fulfill more of your travel desires. If you are getting a new job, you could try something in the travel industry, such as an airline or cruise company. Tour the world while you finish out your working years.

[See 5 Ways to Calm Your Retirement Fears.]

You get out of the house, socialize, and stay sharp. A job gets you up and out of the house each day. Without it, you could find yourself bored at home watching too much TV. Working can give you a purpose. Plus, it typically comes with friendship and helps meet social needs. A job will give you a fixed set of friends to count on each day. Having this group of friends will make life more interesting and fulfilling. The challenge of a job can also keep your mind sharp and give you access to resources that can help you keep your skill set up to date.

More time to save. The obvious benefit to working longer is the added income. You will have more time to save for when you do stop working. A job also helps you spend less during the week because you’re busy during the weekdays and can't go on any spending sprees. You are less likely to spend when you are busy with duties at work.

[See The 100 Best Mutual Funds for the Long Term.]

Boost Social Security. If you delay claiming Social Security between ages 62 and 70, you will receive more of a benefit when you finally do take it. And since Social Security uses your highest 35 years of earnings to calculate your benefit, your high salary now could replace a lower salary year in the past, effectively increasing your benefit.

Phil Taylor is the author of the popular 52 Ways to Make Extra Money. Find out how to save more money and get the latest news on the best online savings accounts and the best online stock brokers at his blog, PT Money: Personal Finance.