The idea of retirement often raises a number of questions, the first being, “can I afford to stop working?” The second question you might ask yourself is, “how will I fill my time?” Let’s tackle question number two first.
What to do with your extra time
After you retire you have more time on your hands, thus you can do things you could not do while you were working. Some of these activities might include:
- Learn something new
- Take a class
- Teach a class
- Start a side business
- Mentor a child
- Work part-time
This last bullet point might make you wonder if you can continue to work after retirement.
Can I work after retirement?
The answer is yes, once you reach the normal retirement age you may go back to work as an employee and add to your Social Security benefits. However, you must be aware of the terms set by the Social Security Administration.
The Social Security Administration defines retirement in very specific terms, “you are retired if you work less than 15 hours per month. You are not retired if you work more than 45 hours per month. If you work somewhere in between 15 and 45 hours a month, your retirement status depends on the type of work you do.”
According to the IRS, when your retirement income is limited to Social Security, the benefits do not count for tax purposes and you do not have to file a tax return. If you do have “additional income that exceeds IRS limits, you may be required to count part of your Social Security benefits as income,” as reported on Money.USNEWS.com.
Create steady income to last through retirement
According to MarketWatch, “the 4% rule, is a rule of thumb used to determine how much a retiree should withdraw from a retirement account each year.” This rule seeks to provide a steady income stream to the retiree while maintaining an account balance that keeps income flowing through retirement years.
Now many would think $1 million dollars is a significant amount but how many years do you think you can live on $1 million dollars? Where you decide to retire will have a big impact on how long your retirement money lasts, according to new data from GoBankingRates.com. On average, it estimates $1 million in savings will last roughly 19 years in the United States.
Advance Planning for Retirement
It is important to remember advance planning will save you money in the long run and it is never too early start saving. Even the smallest amount can go a long way when you are ready to retire.
At Filipek & Company we can help you decide and create a plan for how much to save with minimal sacrifices. Filipek & Company would be glad to help with your financial planning, income tax and accounting needs.