Retired and working

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Many people who have retired end up returning to paid employment, generally because they’re having difficulty making ends meet or they simply miss having a job. If you’re planning to go back to work or just thinking about it, here are a few steps to ease the transition.

1. Get organized
With a new job, your time will be at a premium, and it’ll pay to be organized. Create a personal financial center at home to keep your family’s financial records at your fingertips. If possible, you may want to set this up in your home office or near your family computer for easy, online bill paying (if you pay your bills electronically).

Make sure original documents, such as a will or mortgage, are kept in a safe deposit box outside of your home as well as in a secure safe at your house. Remember to always keep a copy of your documents in a secure financial center.

2. Understand the Social Security implications
Earning wages may temporarily reduce the amount of any Social Security retirement benefit you’re receiving. Eventually, however, you will have the opportunity to make up for any reduction in your Social Security benefit.

Full retirement age: the age at which you’re entitled to receive your full (unreduced) Social Security retirement benefit. Your full retirement age depends on your birth year; it starts at 65 for people who were born before 1938 and gradually increases to 67 for those born in 1960 or later.

  • If you’re under full retirement age and collecting Social Security, your benefit will be reduced by $1 for every $2 in wages you earn over an annual earnings limit, which in 2012 is $14,640.
  • In the year you reach full retirement age, your benefit will be reduced by $1 for every $3 in wages you earn over a higher annual earnings limit than the one mentioned above; in 2012, this limit is $38,880. Only earnings for work performed before you reach full retirement age will count toward the limit.
  • Starting with the date you reach full retirement age, your earnings will no longer affect your Social Security retirement benefit. Also, from that point on, your benefit will be increased to account for amounts previously held back due to your earnings levels.

3. Plan your expenses
Your income might increase, but you should anticipate expenses you probably haven’t had in a while, such as commuting costs, dry cleaning, and new clothes for the job. Calculate how much these additional expenses will cost each month. Then make any adjustments to your budget based on what you expect to earn and spend in the future.

4. Keep saving for retirement
If and when you begin a new job, don’t forget that you will probably stop working again at some point. If your new job offers a retirement savings plan, try to contribute at least enough to the plan to receive the full amount of any match provided by your employer. You can keep contributing to traditional IRA until the year you reach age 70½, when you must stop making contributions and start taking distributions. And you can keep contributing to a Roth IRA indefinitely, because there are no age limitations.

One stop on the journey
As life expectancy beyond the traditional retirement age continues to increase, one stop on a person’s retirement journey may include a return to the workforce. With proper planning, this interval can significantly enhance retirees’ financial readiness for the rest of their retirement.

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The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all entities or persons.

© 2012 Teachers Insurance and Annuity Association-College Retirement Equities Fund, New York, NY 10017

© 2014 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017