It is more likely than not that you may end up working at least part-time in your retirement.
All of us are not going to be able to live out the idealized version of retirement that we see in popular media. Most Americans are woefully unprepared financially for retirement.
So, can working part-time negatively affect your retirement? It can, and here’s how.
Taxes
If you work part-time during your retirement before or while receiving Social Security, then you will constantly have to monitor your part-time earnings potential.
The accumulated values of any assets, capital gains, dividends, and investments could also increase taxation on your Social Security benefits.
If you are single and make at least $25,000 annually, or under $34,000, then as much as 50% of your Social Security income can be taxed. But if your annual part-time income exceeds $34,000 then 85% of your benefits could be taxed.
Retired couples who jointly earn at least $32,000 and less than $44,000 annually can see 50% of their Social Security benefits taxed. Earn more than $44,000 annually and over 85% of Social Security benefits can be taxed.
Your best option may be to delay Social Security benefits for as long as possible while you work part-time after retirement. If you delay your Social Security benefits until age 70, then you will receive 132% of your benefits.
Less free time
The average person could spend over 90,000 hours working for a living from their youth until retirement. 90,000 hours is about a third of the average human life span.
The social contract of being an adult involves having the maturity to accept that you can’t just do what you want. When you have a family and bills to take care of, dreams, desires, and wants eventually become deferred, forgotten, or voluntarily sacrificed.
Adults live for 14 days of vacation annually and hope that they can indulge in long-deferred passions and hobbies after retirement.
Working part-time or even full-time after retirement is a tacit acknowledgment that you won’t get to finally enjoy free time, hobbies, or travel.
The issue may be unavoidable considering inflation and the ever-rising cost of living. But you will have to accept experiencing a less-than-ideal retirement with little time to indulge in hobbies, passion projects, or travel.
