3 Reasons to Work During Retirement

By Maurie Backman Markets Fool.com

With countless workers falling frighteningly behind on their long-term savings, many are coming to terms with the fact that they may never actually retire. In a recent TD Ameritrade survey, 25% of respondents said they don't see retirement in their future. But while some people blame finances, or lack thereof, for destroying their retirement dreams, others are actively choosing to redefine their retirement picture. According to a Merrill Lynch report, 72% of pre-retirees 50 and over claim that their ideal retirement includes working in some capacity, whether it's part-time, full-time, or somewhere in between.

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Of course, not all work has to come in the form of logging hours on a timesheet or reporting to a cranky boss. Seniors in particular are more likely to start their own businesses than any other age group. Data from the Kauffman Index of Entrepreneurship, in fact, shows that 55- to 64-year-olds comprised 24% of new entrepreneurs last year. Whether you're looking to pursue an independent business venture in retirement or get a job at an existing company, here are a few good reasons to keep working at a time when so many others are completely calling it quits.

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1. You'll generate extra income

First, the obvious benefit -- working in retirement is a guaranteed way to bring in additional income. A large number of retirees today are starting off already behind on savings. Transamerica reports that retirees have a median savings balance of $119,000, which, over a 20-year retirement, translates to only $5,950 a year, or just under $500 a month, of income. Even when you factor in Social Security, which, for the average individual recipient today, equals $1,360 per month, that's still not a whole lot of income to go around, especially given the cost of healthcare in retirement. That's why working is a reliable means of generating income at a time when you may not have as many safe choices for boosting your earnings.

2. You'll save money on leisure costs

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Retirees who don't work typically have a ton of free time on their hands. But occupying that free time tends to come at a cost. Even with the most generous senior discounts around, you'll still spend money to go to the theater, visit museums, take classes, and enjoy those early bird specials. And over time, you could end up spending way more than you imagined. Merrill Lynch reports that 58% of retirees don't budget for leisure activities in the course of their retirement planning, so the busier you keep yourself by working, the less money you'll spend filling your days with something meaningful to do.

3. You'll ward off depression

The idea of not having a job to go to in retirement may seem nice at first. But don't underestimate the impact boredom can have on your mental and physical health. Research from the Institute of Economic Affairs tells us that retirement increases the likelihood of falling victim to clinical depression by 40%, and it also makes you 60% more likely to be diagnosed with a physical illness. Having a job -- especially one you enjoy -- will give you a good reason to get up in the morning. And while that benefit alone should be motivation enough, keep in mind that the healthier you are on a whole, the less you're likely to spend on medical care.

If you're still not convinced, consider this: TD Ameritrade reports that 10% of retired boomers wound up becoming reemployed in some capacity after realizing they actively wanted to work. And while won't necessarily find yourself itching to get back in the game during the first few months of retirement, you may come to change your mind over time.

Working in retirement is a good way to generate income, save money, and keep yourself busy at a time in your life when you may be in desperate need of a purpose. And the more you enjoy whatever it is you end up doing, the more fulfilling the experience will be.

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