Should you stay? Worker shortage will spur incentives to keep boomers on job
REBECCA WARREN is a certified financial planner professional and certified senior adviser in Mesa. She can be reached at (480) 357-8380 or by e-mail at Rebecca@ WarrenFinancialServices.com.
Various agencies and academics have predicted a systemic labor shortage over the next 25-30 years as the gap between baby boomers and entrants of collegeeducated workers widens due to boomers’ mass retirements. There are plenty of arguments over this theory, but employers are acting now to keep older workers in their jobs just a little longer. Some boomers are finding out their bosses don’t want them to retire or are willing to make interesting compromises to give them an incentive to stay on full time or part time. In a survey of older workers in the July 2008 EBRI Issue Brief, published by the nonpartisan Employee Benefit Research Institute, 29 percent of workers said that feeling truly needed for an assignment was one of the top three most effective draws for staying on the job. Other incentives that ranked highly include: receiving a full pension while working part time, a pay increase, continuing company-subsidized health insurance at the same level as full-time workers and receiving a partial pension while working part time. So what would convince you to stay on the job or unretire if your employer comes calling again? It makes sense to talk over such issues with a tax professional and a financial planner. No matter what the incentives put in front of you, there are key issues to consider: • If you’re five to 10 years away from retirement and reviewing your retirement thinking so far, it makes sense to ask yourself under what conditions you’d return to the workplace. You obviously need to know based on current projections how much money you’re likely to gather from savings and other retirement resources. Then you need to consider how much money you’d be satisfied making in your post-retirement working life.
• Consider how a return to the workplace will affect you personally and socially. If you’re 40, 50 or 60, working right now probably feels like breathing — when have you not worked? But it may not be the best option after a year or two out of the workplace.
• Tax issues shouldn’t determine your ambitions and goals, but it’s important to consider the impact work-related income will have on your retirement. Many retirees find that it doesn’t take much post-retirement, work-related income to tip them into a higher bracket. Look for ways to control the taxes you’ll ultimately pay, including continued participation in qualified plans, IRAs and other tax-favored accumulation vehicles and using annuity income to fill the gap between the beginning of the “post-retirement” period and the age when full Social Security benefits can be drawn without an offset for employment income.
• If you are planning to work, consider not only the tax impact, but also how that might change the way you plan to draw on your retirement savings and investments as well as Social Security. If you are planning to work, it’s important you consider delaying receipt of those benefits for as long as you can.
• If retirees returning to the work force are already receiving Medicare or covered by a “Medigap” policy, they may be able to lower their costs or improve their coverage by accepting group coverage as primary underwriter of their medical expenses.
• If you return to the workplace, see what you can do to take advantage of your new employer’s 401(k) plan or any other tax-advantaged retirement savings benefit, particularly if an employer matches your contribution. Don’t miss a chance to enhance your retirement savings.
