Get a Job in Retirement. It’ll Help Your Wealth—and Your Health.

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Illustration by Luke Brooks

After a 30-year career at Procter & Gamble, Francis Nelson Beebe was living his retirement dream—playing about 200 rounds of golf a year—before an epiphany.

“I was standing over a putt one day and I said, ‘I can’t do this for the rest of my life,’ ” the former logistics executive recalls.

For Beebe, who graduated from the Cordon Bleu culinary program after retiring from P&>, that has meant a second act as the baker and owner of Mr. Nelson’s Cookies. Five days a week, Beebe makes 24 batches of a dozen artisanal chocolate-chip cookies that he sells in packs of six or 12 over the internet or individually at farmer’s markets on weekends.

“I’m 73 years old, and I feel like I’m 45,” says Beebe, who bakes in Gold Canyon, Ariz., after his seven-year retirement. “I can’t wait to get up in the morning.”

Francis Nelson Beebe and his wife, Michele, with his signature cookies.

Courtesy Francis Nelson Beebe

The share of retirement-age Americans working has doubled since 1985, according to a study by investment firm United Income that examined federal data. Twenty percent of people 65 years or older either work or are looking for work.

Many Americans, particularly lower-income retirees, have little choice but to keep working to support themselves. Even for higher-income families, part-time work can allow them to hold off drawing down retirement portfolios or delay collecting Social Security to maximize its value.

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Other people with no money needs whatsoever choose to work in retirement to stay busy and engaged. Health experts say that maintaining social connections and staying physically active helps slow aging, and working part time can help on both counts.

“Keeping moving is what keeps you from getting frail as you get older,” says Carolyn McClanahan, who is both a medical doctor and a financial advisor in Jacksonville, Fla. McClanahan recommends that all of her clients keep working in retirement if they can find something they enjoy.

One of her clients is a retired corporate executive. “She really started languishing, not having a sense of purpose” after retiring, McClanahan says. The woman got a job as an executive assistant and worked for another five or six years, earning $30,000 or $40,000 a year, before retiring again. She has more outside interests and is doing much better in retirement the second time around, McClanahan says.

If you’re retired or preparing to retire, here are the financial and health benefits that can come from continuing to work at some level.

Portfolio Preservation

Every dollar you earn in retirement is another dollar you don’t have to take from your investments. Even low-paying jobs can make a big difference in how long your savings last.

Say you make $20,000 from a part-time job as a retiree. It takes roughly a $500,000 portfolio to generate $20,000 a year for 30 years in retirement using the 4% rule for withdrawals, McClanahan points out. It’s usually easier to earn $20,000 a year working part time than to amass another half-million dollars.

“By not having to pull from your portfolio, it allows it to grow,” says Karl Schwartz, a Miami financial advisor and certified public accountant. “Your assets end up growing quite a bit longer in that scenario.”

Delay Social Security

This government pension is an inflation-adjusted annuity with survivor benefits. And you have every motivation to make it as big as possible before you begin collecting it, particularly if you’re the top earner in a family.

Let’s say you retire at age 62 and are due to collect $3,000 a month from Social Security at your full retirement age of 67. If you opt to start Social Security early at age 62, you would get 70% of that amount, or $2,100 a month.

Now suppose you get a part-time job to replace that money. You work for eight years until you’re 70 years old and then start collecting Social Security. You will now get $3,720 a month for the rest of your life, 77% above the $2,100 you would have received at age 62, and 24% above the $3,000 at age 67.

And it’s not just you who comes out ahead. When you die, your spouse will effectively receive that bigger check for the rest of his or her life.

What if you begin collecting Social Security at age 62 and realize it’s a mistake? Within 12 months, you can repay all of the money you’ve collected from Social Security and wait until later to start your benefits.

Even if that isn’t an option, retirees come out ahead by going back to work. Some hesitate because of the Social Security earnings limit, which reduces their benefit by $1 for each $2 they earn in excess of $18,960. But, in most cases, they’ll get that money back because Social Security will increase their benefit after they hit full retirement age. It is the equivalent of do-over on retiring early.

Make Roth IRA Contributions

If you work part time and are over 50 years old, you can contribute up to $7,000 a year of earned income to a Roth individual retirement account.

Because Roth accounts are funded with after-tax money, any money taken out of them is tax-free. They offer the potential for decades of tax-free growth and typically should be the last accounts you tap in retirement, says financial advisor and certified public accountant Ann Gugle of Charlotte, N.C.

She calls Roth accounts an “insurance policy” in case the government raises tax rates in the future. Roths are also a great way to pass money tax-free to children because you pay no taxes on investments in a Roth during your lifetime, they go tax-free to heirs, and the heirs have up to 10 more years of tax-free growth before they have to empty the Roth. And they still won’t pay any taxes when they empty the Roth.

Stay Connected

Research has shown that seniors who maintain strong social networks have better all-around health, including better brain function. Working part time forces people to stay connected.

If you keep working part time for your old company, you are maintaining the network you built during your work life. If you go into a new job setting, you begin building a new network. Either way is good for your health. And if you’re learning a new skill in retirement, that is helping your brain, as well.

Lee McGowan, a Boston-area financial advisor, says his clients are increasingly viewing retirement as a time to slow down, not to stop working. “People get to age 65 and say, ‘What am I going to do for the rest of my life, and what gives meaning, and I want to continue to work,’ ” he says.

Stay Sharp

Many retirees end up doing work that is similar to what they did during their careers, sometimes at the same companies.

Lauren Lindsay, a Houston financial advisor, has a lot of clients who retire from energy companies and then return to work in the industry. “They are brought back because they have an expertise and can finish up a project or mentor their successor,” she says.

Jim Price, 75, retired four years ago as a primary-care doctor employed by the University of Florida in Jacksonville. He retired and moved to Ocala, Fla. The University of Florida in Gainesville asked him to come in three days a week to work in its cardiac practice. He spent three years doing that.

Price hasn’t worked for the past year, as he and his wife have been traveling a lot, but he plans to work part time again as a doctor.

“I know guys that have been in their 90s before they quit,” he says. “Physically, they were perhaps compromised. But mentally they were pretty good.”

Write to us: retirement@barrons.com

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