There’s a reason so many people don’t wait out retirement the way they should. The thought of losing the paycheck you’ve counted on for years can be daunting, and that’s understandable.
Now, ideally, you will enter retirement with a nice sum of money hidden in a 401(k) or IRA. But this money is not guaranteed to last forever. And if you’re worried about outliving your savings over your lifetime, well, that’s understandable. This is especially true if you don’t have a particularly large nest egg.
According to Fidelity, the average IRA balance at the end of 2022 was $104,000, while the average 401(k) plan balance was $103,900. It’s a perfect balance if you’re young enough and still have many years of work ahead of you. But if you’re about to retire with just over $100,000 set aside for your senior years, then yes, outliving your savings is unfortunately a distinct possibility.
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The good news, however, is that there are steps you can take to stretch your nest egg. One is to delay your Social Security claim after full retirement age to receive a higher monthly benefit for life. The other involves making a move that could be as good for you socially and mentally as it is financially.
Returning to work could make your money last
The less money you have to withdraw from your 401(k) or IRA each month, the longer your savings are likely to last. And a good way to preserve your nest egg is to supplement your retirement income with some type of job.
In a recent Paychex survey62% of respondents said they returned to work after retirement, and 23% cited fear of outliving their savings as the reason.
Now, the reality is that the income you bring in from work could help cover many of your bills in retirement, so you’re not as dependent on your savings. But working as a retiree could have benefits beyond just the salary you receive.
For many people, work can serve as a social outlet. And working out could also be good for your mental health, especially if you’re someone who likes structure and can’t stand downtime too much.
Plus, when we talk about working in retirement these days, we don’t necessarily mean committing to a set schedule and doing boring administrative tasks. Work can take many different forms in today’s gig economy. You can drive for a ride-sharing service, care for animals, or consult at your old estate on a schedule that works for you. There are plenty of possibilities to explore that don’t require you to file papers in an office all day or record transactions at a cash desk.
Working in retirement could reassure you
Keeping a job in retirement can help you financially and help reduce your stress. And the less you care about money, the happier you are likely to be as a retiree. So if you’re concerned about outliving your savings, it pays to consider incorporating work into your retirement plans.