It's time to retire the idea of retirement—or at least push it back by a few years. Although it's fun to dream about a permanent escape from a grueling commute or an overbearing boss, think about how much you gain from your friendship with coworkers and having a daily routine where you feel useful. The financial incentives to delay retirement are obvious and dramatic. And recent research even suggests that working part time in retirement can improve your health. Here are 10 reasons you shouldn't quit your day job.
Your health. Seniors who work part time in retirement experience fewer major diseases and are able to function better day to day than people who stop working altogether, according to findings reported in the October issue of the Journal of Occupational Health Psychology. "Being engaged in some meaningful activity, whether in paid employment or unpaid volunteer activity, is likely to have beneficial health effects when one retires," says Kenneth Shultz, a psychology professor at California State University–San Bernardino and coauthor of the report. He attributes the health benefits of working in retirement to the physical and mental activities and social contact people engage in at work, which can be more difficult to maintain when you leave the workforce.
Your marriage. When you promised to stay with your spouse for better or worse, that didn't necessarily mean you wanted to spend 24 hours a day with that person. After years of spending mostly nights and weekends together, being together all day every day can be stressful. Many married couples don't agree on their respective retirement ages (60 percent) or whether they will work in retirement (44 percent), according to a study of 502 married couples between ages 45 and 72 by Fidelity Investments and Richard Day Research conducted in April. When one spouse retires and wants to travel or relax and the other desires to work each day, it can create new tensions and resentments. A job outside the home can make you feel more autonomous, give you something to talk about, and even keep you from tripping over each other all day.
Delay taxes. Retirees can begin taking penalty-free 401(k) withdrawals at age 55 and IRA withdrawals at age 59½. But when you debit your retirement accounts, ordinary income tax is due on the amount withdrawn. If you delay tapping your retirement accounts, they have more time to compound, tax deferred. Minimum withdrawals from most retirement accounts don't become required until age 70½. Why not defer taxes for an extra decade if you can?
Higher Social Security checks. Social Security eligibility begins at age 62, but your checks are reduced by 25 to 35 percent if you sign up at this age. For each year you delay signing up for Social Security between ages 62 and 70, your benefit will increase by 7 to 8 percent. Plus, your payout is calculated using your 35 highest-earning years in the workforce. Baby boomers who make more now than they did earlier in their career can boost their Social Security checks by working longer.
Work adds meaning to your life. Our identities are tied up in the work we do. When we meet new people, one of the first things we tell them is our occupation. But the feeling goes deeper than that. Retirees sometimes lose the sense of purpose of getting up to go perform a necessary role in society and being an active member of the community. Although needing the money is the top reason Americans give for continuing to work past age 67 (84 percent), according to a recent Sun Life Financial and Interviewing Service of America survey, many people also say staying mentally active (81 percent) and enjoying working (65 percent) were important parts of their reasoning for not retiring.
Your social life. For many of us, our social lives revolve around work. We attend office parties, go out to lunch with coworkers, and meet up at networking events and conferences. Upon retirement, those work-related social functions stop. "Many people think of retirement as an abyss because they define themselves by their jobs," says Punam Anand Keller, a management professor at Dartmouth College's Tuck School of Business. "All these gifts of identity and power and money and even order and a sense of community kind of disappear." It takes more effort to meet up with friends when you're not already out for the day at the office.
Health benefits. Those who retire before age 65 have to worry about how to pay for expensive health insurance premiums and what to do if they're excluded from coverage because of a pre-existing condition. And the healthcare cost conundrum doesn't end if you wait until age 65 to retire. Spouses both age 65 in 2009 will need $210,000 to have a 50 percent chance of affording their medical needs, according to calculations by the Employee Benefit Research Institute. And that's after the couple qualifies for Medicare Part B medical insurance, Part D prescription drug coverage, and a Medigap policy. Eliminate this retirement cost by getting health insurance through an employer.
Society needs your skills. The oldest members of the population typically have the most experience and acquired wisdom. Pass your skills, Rolodex, or clients on to a younger worker in your organization, teach a class at a local school or community college, or mentor younger employees. Many older workers also want to give something back to society. "They are really yearning for something that leaves a legacy," says Marci Alboher, a senior fellow at Civic Ventures and author of One Person/Multiple Careers: A New Model for Work/Life Success. "They are reorganizing their priorities and figuring out how they can have the most impact." A 2008 MetLife Foundation and Civic Ventures survey of Americans ages 44 through 70 found that over half (54 percent) are interested in or already have a second career helping others. The top late-life career choices were education, healthcare, government, and other organizations that serve a public good. The world and U.S. employers both need you.
Job perks. Money isn't the only valuable form of payment we receive from our jobs. Sometimes employees get subsidized travel, employee discounts, and even free food on a regular basis. S. C. Johnson & Son Inc. in Racine, Wis., where 26 percent of employees are age 50 or older, has a private fitness and aquatic center and a physician on staff for employee use. Pick out a part-time job that comes with perks.
Haven't saved enough. Let's face it. You probably haven't saved enough to retire. The average Fidelity-administered 401(k) plan held just $60,700 as of September 30. That's not nearly enough to pay for 20 to 30 years of retirement if you don't have other sources of income. Only 26 percent of workers age 55 and older have $250,000 or more saved for retirement, according to the Employee Benefit Research Institute. Working a few extra years packs the double punch of giving you more time to save and reducing the number of retirement years you need to finance. Of course, deciding to delay retirement is the easy part. The challenge is finding a new job or holding on to the one you have now.