Why Work After Retirement?

Why would anyone want to work after retirement? Isn't celebrating your exit from the workforce the whole point of retirement? A large percentage of nearly retired U.S. households aren't financially ready for retirement and will have to drastically reduce their living expenses. Some of us also enjoy the social interactions we get at work and have difficulty dealing with extra free time. Instead of jumping into retirement full time, it makes a lot of sense to work part time instead. Here are some of the many benefits of working a little bit in retirement:

Mortgage payoff. Nearly half of homeowners over age 62 have a mortgage. Those who retire will have to withdraw from their retirement accounts to pay the mortgage. The more you withdraw from your retirement accounts each year, the more tax you will have to pay on your retirement distributions. It's better to work part time for a few more years and try to pay off the mortgage before fully retiring. Your cost of living will be quite a bit less without a monthly mortgage bill.

Retirement savings not up to par. The National Institute on Retirement Security recently released a study showing that a typical near-retirement household between ages 55 and 64 only has $12,000 in retirement assets. This minimal retirement savings isn't going to last long in actual retirement. If your nest egg is anywhere near that low figure, your only choice is to work a bit longer.

Bigger Social Security benefit. The longer you put off taking Social Security benefits up until age 70, the more you will receive. For each year you delay claiming the benefit you will receive about 8 percent more. If you can find an enjoyable part-time job, why not put off signing up for Social Security for a few years.

Health care coverage. If you retire before 65, then you probably will have to spend a lot of money on health care coverage. Medicare will kick in at 65, but before then you'll have to figure out how to pay for health insurance. It's not easy to find a part-time job with health care coverage, but there are a few out there.

Purpose. You need to have a purpose, whether you're retired or not. Many retirees have a hard time adjusting to an unstructured lifestyle and plunge into depression. Working part time on something you care about will ease the transition and give you a purpose. If you don't need the money, then volunteering for an organization you care about is also a great option.

Retirement can be a difficult transition for many of us. Instead of an abrupt transition to full retirement, why not work a little bit and ease into it? Staying active by working part time after retiring from a long career can help your finances and help you adjust to a less structured retiree lifestyle.

Joe Udo blogs at Retire By 40 where he writes about passive income, frugal living, retirement investing and the challenges of early retirement. He recently left his corporate job to be a stay at home dad and blogger and is having the time of his life.