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| Photo Credit: Benold Financial Planning | |
Republicans are taking aim at Social Security and Medicare; employers are struggling to fill jobs. What better time to talk about phased retirement? It has a win/win quality that deserves serious attention from both employers and older workers.
I knew I wanted to delay drawing on Social Security until I turned 70. I also knew that while I had been a steady saver, my 401(k)
was not as plump as it needed to be to support my husband and me for
what could be as much as three decades. I had planned to talk with my
employer about phased retirement, but as a result of an informal merger, my intense, nonprofit COO position was eliminated a few years before the time was right. Having my job disappear both accelerated & complicated my plans.
I was lucky.
I found a great job as a Finance
Director at a smaller nonprofit. It was a new position; a
less-than-full-time schedule worked for the organization as well as it
did for me. For the organization, it was a chance to experiment with
adding a new level of expertise. For me, it was a chance to begin phased
retirement.
Three years later, I'm still working part-time,
even though I've taken on a larger scope of work. There are challenges
both for me & for the organization, but--so far--we've dealt with
them successfully. The benefits continue to outweigh the disadvantages for both of us.
If
you are nearing retirement age, phasing is something to explore.
Ideally, you'll be able to do it with your current employer, but if that
doesn't work, don't give up!
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| Photo credit: superguide.com.au |
And...a caveat. While these articles rightfully report that if you are collecting Social Security before you reach your full retirement age and you are also working, your Social Security benefits will be reduced. What they don't mention is this: If you've reached your full retirement age--currently 67 (if you were born after 1960)--there is no reduction to benefits, no matter how much you earn.
Since 1984, when Ronald Reagan was President, Social Security benefits have been subject to federal income tax. If you live in one of eleven states (Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont), they are also subject to state income tax. However, in most states (like California) Social Security isn't taxed. So, depending on where you live, you get a bit of a tax relief, too.
Beware, however: One of the things likely to be put on the table in the fight over the debt ceiling is raising the full retirement age from 67 to 70 & the eligibility age for Medicare from 65 to 67.
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