Thinking About Continuing to Work After the Age of 65?

Pauline Haren
November 6, 2019

[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text]If you continue to work, this means you can save more for retirement. When you delay making withdrawals, your retirement savings will keep growing. There are, nevertheless, several repercussions to consider if you work past 65, which may impede your retirement funds.

Here are some things to consider:

Federal workers, like everybody else, are eligible for Medicare Part B benefits at the age of 65. You will need to make some significant choices in regards to your future healthcare needs.

Medicare is a complex plan, and you’ll want to ensure you sign up at the correct time. When you are 65, there is a seven-month window for you to register. You have three options if you want to avoid penalties. You must register within three months prior to you turning 65. Another option is that you can choose to register in the month of your 65th birthday or three months after the month of your birthday. Be mindful that if you decide to sign up for Medicare Part B with the last four months of your registration period, your coverage will be postponed.

Enrolling in Part A and B of Medicare is an excellent source of information to understand more about the inner workings of the program.

The registration period only applies if you decide to retire before 65 years of age. If you are still employed and covered by FEHB once you reach 65 years of age, you may wait till you retire to register and will not be subject to any penalties if you are enrolled within eight months after retirement. If you do not register within the extended eight-month timeframe, this will cause a 10 percent increase for every 12 months that you could have registered for.

Secondly,⠀if you work longer than the expected retirement age, this can be helpful in regards to your Social Security benefit. Several federal employees, depending on when they were born, are not eligible for their entire Social Security benefit until 66 to 67. When you delay taking your SS until your full retirement age, you receive an increase of eight percent each year until you are 70 years old.

If you take your SS benefit before your full retirement age and keep working, some parts or all of your benefits will be reduced.

Retired federal workers receiving a Social Security pension prior to full retirement age can receive up to $17,640 per year as of this year. $1 is withheld for every $2 above that amount. Retirees achieving full retirement age could receive up to $46,920. $1 is withheld for every $3 above the cap. When you reach full retirement age, the income limit will no longer apply, and you will be able to earn as much as you wish. Benefits from SS are reassessed to give you credit for any benefits withheld

Your IRAs and TSP can be affected if you work beyond 65. Usually, IRAs mandate withdrawals one you are 70 and a half years of age. Income taxes are also subject to withdrawals from your TSP account. When you continue to work over 70 and a half, you do not have to withdraw from your TSP until you retire. You still need to take an RMD from other accounts like IRAs and 401(k)s.

There are definitely some financial advantages of working beyond 65, but there are downsides to be taken into account.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”36123″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]