Are you thinking of working after you retire? There’s a lot to consider, so to help simplify things we asked Paul Shelestowsky, Senior Wealth Advisor, for some insight. Check out his 4 great tips for working in retirement.
1. Do the math
Working in retirement can have some significant tax considerations. This doesn’t mean you shouldn’t do it, though - just make sure that you, your advisor, and your accountant work together to figure out your working-in-retirement plan. This can help you avoid any old age security claw backs. You don’t want to end up in a situation where you’re making too much money. Otherwise, you may end up paying taxes on RRIF withdrawals at the same tax rate as your contributions.
2. Ask yourself why
I always ask Members: “Are you working in retirement because you want to or because you have to?”
Some people have to work after retirement because they need more income. For people who choose to work after retirement, I typically have conversations about the pros and cons of that decision. For example, I’ve worked with teachers and principals who are fine with sacrificing some of their old age security because they get to continue doing something they love. For them, forgoing some of their benefits is 100% worth it. But again, it all comes back to planning. I work with Members and their accountants to run scenarios on their plan to understand how working will affect their retirement finances.
3. Consider the benefits
Working after retirement has social and health benefits. Depression is very real for many retirees. Not having a routine and a reason to get out and talk to people can be very isolating. Many people choose to work after retirement for the social and health benefits, not the financial gain. For example, I work with a husband and wife who are retired working as volunteers for the Niagara soup kitchen. They always tell me that they're busier now than they were when they were both working. They find the work very fulfilling and wish they could have gotten involved with this organization earlier.
I also work with a Member who drives for winery tours. He loves it! He’s retired, but wanted to earn a bit of money and stay engaged. He’s very knowledgeable about the area and finds the work and the social engagement so rewarding. It’s totally different from what he did in his career, but it’s something he’s really passionate about. For many retirees, the social, mental, and emotional benefits of volunteering or working are essential.
4. Stay flexible
When a Members is trying to decide whether or not to work after retirement, I always explain that nothing is written in stone. Even if you want to work after a year of retirement, or six months, that’s fine. We just revisit the plan with an accountant to understand the tax implications. After retirement you actually have more flexibility with your plan. I often advise Members to take some time to breathe and feel things out before deciding the next step. There's no rush, and that flexibility provides real peace of mind during a big life transition.
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