In my last blog I discussed avoiding a boring retirement. In my experience, I have seen many clients keen to retire but, having achieved that goal, they find that after around six months they start to get bored and many return to work, albeit part-time.
In this article I will consider the merits of working part-time, leading up to full retirement.
Working is a great way to stay mentally and physically engaged and, for many, working part-time is an essential part of their happiness in retirement and it is a growing trend amongst today’s retirees. Many of our clients, in their 60s, work part-time – not only as a way to supplement cash flow but to stay mentally and physically fit.
I have a client, Bob, who reached 65 and his employer basically said thank you very much here is a gold watch. Bob was horrified and argued to keep his job. Every birthday, Bob’s employers offered retirement, which he refused. When he reached 74, Bob’s employers insisted that he retired.
So, what did Bob do? He started his own company! If you met Bob, you would think he was at least 10 years younger, both physically and mentally.
Whilst the most obvious benefit of part-time working in retirement is the additional cash flow – which can help delay drawing down the full income from pension funds, allowing them to potentially continue to grow – there are other advantages of part time work, such as continuing to benefit from employer’s health insurance and pensions. These all help to achieve a more secure financial future.
There are, however, other things to consider.
Working part time in retirement could complicate your financial situation if you do not plan adequately enough, so it is essential to take a long-term view in your financial planning before taking any part-time roles. For example, a part-time salary on top of a good pension income could nudge you into being a higher rate taxpayer which you would probably want to avoid.
Generally, working helps you stay mentally sharp, socially engaged and physically fit. This ‘encore’ phase of your career may provide more time to give you the opportunity to focus on interests that you had to delay when you were pursuing a full-time career.
It may be the time to specialise in what you really love and potentially absorb yourself in an entirely new interest that you have always been eager to learn about.
However, part-time work can be a slippery slope.
Retirees who go back into the workforce may easily find themselves working more than part-time, usually because they are so valuable and/or good at their jobs and whilst it may be nice to be seen as ‘the’ expert, it can be difficult to set boundaries for your availability.
Some people stop working for an employer and start their own businesses, often as consultants, which is a great way to share your skills learned and developed over 40 years. But it is important to be aware that there are pitfalls; running a small business can be stressful and suck up a lot of time.
I strongly believe that working on a part-time basis throughout your 60s and possibly into your 70s is a really good idea (think of Bob), but it is also important to consider the following:
I have never seen a gravestone with the engraving ‘he wished he’d spent more time at work’.
What are your plans for easing into full time retirement?
- If you would like more information or advice on retirement planning contact Lamb Financial at email@example.com or by calling (01661) 860438.