A look inside each stage of preparing your business for sale
Four and a half million Americans over age 50 are going back to work or volunteering after retirement.
And another 21 million say they’re ready, according to a 2014 Encore Career survey. Why? Some want to make the most of their talents; some want social interaction; still others seek to keep their minds sharp and bodies busy.
The extra money doesn’t hurt either, especially with several unknowns that can cloud your retirement picture (e.g., longevity, inflation and long-term care needs). Using the 4% annual withdrawal rate, adding $10,000 in income is basically equivalent to a year’s withdrawal on a $250,000 nest egg.
Ready for an encore career? – Consider these things first.
Something old. Some former entrepreneurs still have a lot of ideas to contribute – taking on consultant roles or short-term contracting stints to share ideas and experience on their schedule.
Something new. Energetic retirees may want to start a different small business – almost a third of former retirees spend about 21 hours a week nurturing their new self-employed status.
A source of strength. Research from the Stanford Center on Longevity shows that continuing to work can lead to better cognitive function.
Place, passion and purpose. Some stave off boredom and gain a reason to regularly get out of the house by lending skills to a nonprofit in need of expertise and an extra set of hands.
Coffer filler. Going back to work can provide extra money to allow your nest egg time to, hopefully, compound over time. It can also help keep your spending on track if something unexpected happens.
Financial factors to factor in
Savings. If it fits you and your situation, consider contributing to an employer-sponsored qualified retirement plan or traditional IRA.
The tax man. Even working an extra year or two can push you into a higher tax bracket. Know where you stand and what the next highest threshold is.
Government benefits. New income can affect Social Security benefits, and employer-offered insurance can affect Medicare. Before accepting a new gig, talk to your financial and tax advisors.
Off to work you go?
Different stages of your post-career years bring different feelings about “work” that arise and evolve over time. Carefully review the possible impact on your financial plan before you punch the proverbial clock once again.
Next steps:
- Uncover if you have compelling social, physical, mental or financial reasons to return to work.
- Consider what areas of your life could benefit most from extra income.
- Before making a decision, discuss your ideas and potential new funds with your trusted advisors as part of your overall financial plan.