For many Americans, working beyond the traditionally defined retirement age of 65 is becoming the norm. According to the Voya Retire Ready Index™ study, only one-third of workers anticipate having the choice to completely stop working during their retirement. In addition, the U.S. Department of Labor indicated that more than 30 percent of employed Americans in 2015 were between the age of 65 and 69.
Many employers are focused on helping their workforce achieve retirement readiness. This is good for workers to help them achieve retirement in a manner they want, but this also helps the employer to achieve a healthy balance of talent. That said, while some people may still hope to achieve the classic definition of retirement, there are many good, and sometimes necessary, reasons to pursue an "encore career" even after ending your conventional one. Whether for financial reasons or to simply follow a passion, finding an approach that works best for you can help you live out your golden years to their fullest. Below are three main reasons why one might consider pursuing an encore career:
Supplementing Your Monthly Retirement Income
One of the main benefits of an encore career for most retirees is the additional financial support it can provide. This is particularly relevant if extra income is needed to help meet your monthly living expenses. Sometimes, unforeseen events can cause a shift in your retirement plan. According to the Voya Retire Ready Index, 60 percent of recent retirees said the timing of their retirement was unexpected. If your retirement catches you by surprise, take a deep breath and assess your options. Part-time employment options could be available to help generate any necessary or supplemental funds.
Even if your finances are in great shape to meet all of your primary needs, an encore career can provide the flexibility to help attain the "wants" and "wishes" in retirement. Whether that includes travel, hitting all the items on your bucket list or leaving behind a legacy for your family, an extra income can support all of these efforts -- while still helping to maintain your cost of living.
Following a Passion
One of the great joys of retirement is the freedom to explore both new and old passions. The Voya Retire Ready Index also found one in three current workers would consider an encore career to help occupy their time in retirement. Many retirees take full advantage of their extra time by learning a new skill, trying a new hobby, offering their expertise at a nonprofit or starting a business that they never had the hours to support during their working years.
Preparing for Health Care Costs
Even for those who are well-prepared financially, it is no secret that unexpected health care expenses can take up a large portion of your retirement income. Most Americans (91 percent) express concern about their inability to pay for health care expenses in retirement, according to the Voya Retire Ready Index. Staying active not only helps to prevent or minimize health complications, but it can provide another avenue for potential work opportunities, e.g., in the field of health, fitness or coaching. Staying active is also a great way to keep social and engage with your community.
Another often overlooked bonus of having an encore career is the ability to receive medical benefits. This can be extremely helpful for individuals who may need to retire before Medicare is set to kick in. A job that comes with benefits can in some cases bridge the gap in health care coverage until you are eligible to receive Medicare.
While encore careers may not be the plan for everyone, it is important to take the time to understand your options. Working with a financial professional to create a holistic financial plan is key to helping provide you with the freedom to live your retirement years to their fullest. And after all, isn't that what retirement is all about?
Securities and investment advisory services offered through Voya Financial Advisors, Inc., member SIPC. Neither Voya Financial Advisors nor its representatives offer tax advice.