There’s a reason so many people don’t look forward to retirement as they should. The idea of losing the paycheck you’ve relied on for years can be daunting, and understandably so.
Now, ideally, you’ll be entering retirement with a nice amount of money tucked away in a 401(k) or IRA. But that money isn’t guaranteed to last forever. And if you’re worried about depleting your savings in your lifetime, well, that’s understandable. This especially holds true if you don’t have a particularly large nest egg.
According to Fidelity, the average IRA balance as of the end of 2022 was $104,000, while the average 401(k) plan balance was $103,900. Now that’s a perfectly fine balance if you’re fairly young and still have many working years ahead of you. But if you’re on the cusp of retirement with just a little over $100,000 socked away for your senior years, then yes, outliving your savings is, unfortunately, a distinct possibility.
The good news, though, is that there are steps you can take to stretch your nest egg. One involves delaying your Social Security claim past full retirement age to receive a higher monthly benefit for life. The other involves making a move that could be just as good for you socially and mentally as it is financially.
Going back to work could help your money last
The less money you need to withdraw from your 401(k) or IRA every month, the longer your savings are apt to last. And a good way to preserve your nest egg is to boost your retirement income with some type of job.
In a recent Paychex survey, 62% of respondents said they’ve returned to work in some capacity after having retired, and 23% cited a fear of outliving their savings as a reason.
Now the reality is that the earnings you bring in from working could help you cover many of your bills in retirement so that you’re not as reliant on your savings. But working as a retiree could have benefits beyond just the paycheck you collect.
For many people, work can serve as a social outlet. And working could also be good for your mental health, especially if you’re someone who thrives on structure and can’t cope well with too much downtime.
Plus, when we talk about working in retirement these days, we don’t necessarily mean committing to a preset schedule and doing boring administrative tasks. Work can take on different forms in today’s gig economy. You could drive for a ride-hailing service, care for animals, or consult in your former field on a schedule that works well for you. There are many possibilities to explore that don’t have you filing papers in an office all day or ringing up transactions at a checkout counter.
Working in retirement could ease your mind
Holding down a job in retirement might help you out financially, as well as help alleviate stress. And the less worried you are about money, the happier you’re likely to be as a retiree. So if you’re concerned about the possibility of outliving your savings, it pays to consider incorporating work into your retirement plans.