Many Americans are "unretiring"

There once was a time when retirement meant leaving the workforce for good. However, a survey by Zogby International and the MetLife Mature Market Institute found that about 11% of retirees ages 55-59, 16% between 60-65, and 19% between 66-70 report they have gone back to work.

Doing so is not necessarily a negative. Not everyone does it because they are having trouble making ends meet. Some return because they are bored and need a new challenge; others find a great opportunity to share a lifetime of skills. Yet, for every retiree who considers a return to the workplace, there is a critical need to review investment, insurance, and tax issues. If a retired person has not already done so, it makes sense to confer with a tax or financial advisor before going back on the clock.

Here are some critical points from the Financial Planning Association, Denver, Colo., to consider in a working retirement:

Be sure a working retirement is a variable in your planning. If you are in your early 50s and reviewing your retirement planning so far, it makes sense to ask yourself under what conditions you would return to the workplace.

Consider how a return to the workplace will affect you personally and socially. If you are 40, 50, or 60, working probably feels like breathing--when have you not worked? However, it may not be the best option after a year or two out of the workplace.

Talk to a tax professional before you make a move. Tax issues should not determine your ambitions and goals, but it is important to consider the impact work-related income will have on your retirement. Many retirees find that it does not take much post-retirement, work-related income to tip them into a higher bracket. Look for ways to control the taxes you ultimately will pay, including continued participation in qualified plans, IRAs, and other tax-favored accumulation vehicles and using annuity income to fill the gap between the beginning of the "postretirement" period and the age when full Social Security benefits can be drawn without an offset for employment income.

Consider what earnings will do to all your retirement payments. If you are planning to work, consider not only the tax impact, but how that might change the way you plan to draw on your retirement savings and investments as well as Social Security. If you are planning to work, it is important you consider delaying receipt of those benefits for as long as you can.

Look for work-related incentives. Particularly for retired state workers, there are many opportunities to return to state employment and actually augment existing pensions. Current population projections show that there will be a worker shortage as the Baby Boom generation retires, so many private employers might approach their retirees with similar benefits to make a return worth their while.

Consider insurance issues. If a retiree returning to the workforce already is receiving Medicare or covered by a "Medigap" policy, he or she may be able to lower costs or improve coverage by accepting group coverage as the primary underwriter of medical expenses.

Keep saving: If you return to the workplace, see what you can do to take advantage of your new employer's 401 (k) plan or any other tax-advantaged retirement savings benefit, particularly if an employer matches your contribution. Do not miss a chance to enhance your retirement savings.

COPYRIGHT 2006 Society for the Advancement of Education
COPYRIGHT 2008 Gale, Cengage Learning