Work. Yes, a working retirement is an oxymoron but it’s becoming a common experience as more Americans realize they’re living longer. “Reportedly, 54% of men in their 50s and early 60s work after retirement,” says Randy Thurman, a CPA and financial planner in Oklahoma City, who notes that retirees under 65 in 1997 could earn up to $8,640 without losing any Social Security benefits. Between ages 65 and 69, the allowance rises up to $13,500, while those 70 and over can earn any amount and still receive full benefits. Every other year, those threshold amounts rise to reflect inflation.
Working isn’t just about making ends meet, though. Some retirees find it helps them maintain a routine and a sense of purpose in their lives as well. “I retired two years ago at age 48,” says Melvin Carrington Smith of Hoover, Alabama, who worked 27 years for Bell South and rose to the level of director of marketing. “I always wanted to teach, so I found myself speaking at churches and community organizations, explaining how to reach retirement goals,” he says. After he left work, Smith decided to turn a pastime into a second career: he’s now a financial planner with First Financial Group in Birmingham, Alabama.
Social Security. Uncle Sam’s retirement benefits won’t keep you in steak and lobster, but they can provide you with a steady income. In 1997, the average monthly check was $745 (nearly $9,000 per year), while the average retired couple received $1,256 per month (over $15,000 annually).
The greater your earnings, the greater your Social Security benefits will be. This year, a 65-year-old retiree who regularly paid the maximum Social Security taxes would receive $1,326 a month (nearly $16,000 per year).
You can receive Social Security retirement benefits as early as age 62, although that means accepting smaller checks. If your regular (age 65) benefit would be $1,000 per month, for example, you’d receive only $800 monthly if you retire at 62. On the other hand, deferring retirement entitles you to bonus benefits: some retirees now receive over $1,800 per month (nearly $22,000 per year) because they waited until age 70 to take benefits.
One thing about Social Security that will put your mind at ease: your benefits are indexed to inflation. If you get $1,000 a month this year, for example, you might get $1,030 next year and $1,060 the following year assuming the rate of inflation is about 3% annually. A second plus is that family benefits can be generous. If one spouse had little or no income, he or she can receive 50% of the higher-earning spouse’s benefits. Suppose Dr. Joyce Jones retires at age 65 and collects almost $16,000 in Social Security benefits. While her spouse, John, also 65, may never have had a significant salary, he can collect nearly $8,000 per year based on his wife’s record. That’s enough to bring the couple’s total Social Security benefits to $24,000.
To get an estimate of future Social Security benefits, fill out Form 7004, a Personal Earnings