A recent post on MarketWatch.com notes, “Common sense might suggest that older people are happier because they aren’t working as much. But the new study, by Brookings Institute fellow Carol Graham and University of Maryland public-policy scholar Milena Nikolova, indicates that those who are working are generally more satisfied than those who aren’t.”
To me, part-time work in retirement sounds like a welcome idea. Beyond such work keeping me busy, active, and feeling productive, there are certain financial reasons why I’d welcome the opportunity to work part-time in my golden years.
Income stream diversification
Some people rely upon Social Security or a pension almost solely as their sources of income in retirement. This can be a dangerous game though as should something change in the way such retirement distributions are distributed or how much these payments increase to adjust for cost of living could leave a retiree strapped for cash.
Personally, I’m a fan of diversification in many aspects of life, and it’s no difference when it comes to retirement finances or finances in general. Being able to rely upon a stock-based retirement plan, Social Security, bonds, cash, precious metals, and similar assets can broaden the sources of available financing in retirement. And having part-time work can add to this income diversification as well as potentially allow other assets to grow while this income is used in their place.
Backup finances for an unknown future
There’s no guarantee that assets allocations will always increase in value during a retirement though. Things like changes to Social Security or a pension system, a falling stock market, inflation, and other economic factors might mean that asset values could decrease during a time when you need them most. Part-time work can act as a buffer, allowing you to potentially increase or decrease your work – and income – as needed based upon how your other retirement assets are performing. Part-time work can also help protect against the effect of rising costs of living as well as increased medical and health expenses.
As some retirees have found, retirement isn’t always what it’s cracked up to be. The stock market could plummet, leaving retires without enough money to cover costs. They might find themselves without enough hobbies or things to fill their time. Or they could discover that they miss the camaraderie and productivity they enjoyed in a workplace environment.
Having part-time work in retirement could have them enjoying the best of both worlds. Not only this, but it could help them keep a foot in the door in a role in which they may have thrived. This could make it easier down the road should they find they need to pick up more work rather than having to re-enter an industry after a multi-year period during which their skills may have decreased, contacts may have left or moved on to other areas, and industry requirements may have changed.
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The author is not a licensed financial professional or career advisor. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.