You can have your retirement cake and eat it too

The Bakersfield Californian
January 26, 2015

One third of the nation’s employers expect staffing problems in the coming years as a result of boomer retirements, according to a recent survey released by the Society for Human Resource Management.

And the Pew Research Center estimates that 10,000 people in the United States reach retirement age every day. With a 65-year-old averaging 30 years of work experience, that means employers are watching about 1,000 years of experience walk out their companies’ doors every day. There is little doubt why many employers want to head off this “boomer brain drain” by slowing the pace of retirements.

During the Great Recession of 2008-2009, many boomers watched their retirement savings sucked up in plunging investment returns or used to pay day-to-day living expenses in layoffs. While many are now seeing some financial recovery, they fear it is too little, too late to save enough money for even a modest retirement.

Companies’ concerns about a brain drain could not have come at a better time for boomers. The truth is that the longer boomers can delay their retirements, the better off they will be financially.

According to AARP, nearly 19 percent of today’s workers over 65 years of age have postponed their retirements. Three decades ago, only 11 percent opted to remain in the workforce after 65.

But strategies exist that can allow older workers to begin tasting the fruits of retirement, while still building their retirement nest eggs.

  • Propose to your employer a consultant, part-time or temporary work arrangement. Suggest tasks, such as training younger workers and developing succession plans. Depending on pension and labor agreements, you may be able to receive retirement benefits while still working for the company.
  • Consider working as a consultant or part-time employee for a related company or industry.
  • Contact a senior job placement service, which matches experienced workers with employer needs. A couple that come to mind are YourEncore and Work at Home Vintage Employees. Information about these and other services is available online. Industry associations often provide placement services, as well.
  • Start your own consultant business. The skills you acquired as a full-time employee can be used to provide contracted help to a wide range of businesses. Research the market. Obtain free business advice from the Small Business Development Center at Cal State Bakersfield.
  • Maximize your Social Security benefits. If you are married or have dependent children, you may be able to receive Social Security dependent benefits while still allowing your own benefits to grow. Here’s how it works:

When you reach 66, the Social Security “full retirement” threshold, apply for Social Security, but ask to have your application “suspended.” If you delay taking Social Security until age 70, you will get an 8 percent per year credit that will significantly increase the size of your monthly check.

But when you file at 66, also apply for “dependent benefits.” For example, if you have two dependent children and your monthly benefit at 66 would have been $2,200, each of your children will be immediately eligible to receive a $1,100 per month “dependent benefit” until they reach 18 years of age. The “file and suspend” strategy also can be used by husbands and wives to collect “dependent benefits,” while postponing their retirements to maximize their monthly benefits when they eventually file for Social Security at age 70 or beyond.

Before just surrendering to the idea of working long beyond your retirement age, talk to your employer, do some research and seek financial advice. There are ways you can have your retirement cake and eat it, too.