Many Americans are planning to work through retirement, even if they don't need the money

working in retirementCaiaimage/Agnieszka Olek/Getty
  • A growing number of Gen Xers and baby boomers simply aren't ready to retire.
  • Nearly one-third of Americans over 40 said they would continue working part time after retiring from their career (or they already have), even if there's no financial need, according to a new survey from TD Ameritrade.
  • Most of the respondents want to hold a job in their later years to keep their mind sharp and stymie boredom.
  • The new data underscores previous research that found Americans over 65 who are still working expect to hold a job until age 72, on average.
  • For people who claim Social Security benefits before their full retirement age and continue working, the amount and taxation of the benefit may be affected.
  • Read more personal finance coverage.

A growing number of Gen Xers and baby boomers are rejecting traditional retirement

TD Ameritrade recently surveyed 2,000 people between the ages of 40 and 79 about their plans for retirement. About 31% of the respondents said they would continue working part time - or already have - after retiring from their career, even if there's no financial need.

Rather, most respondents said they want to continue working in a paid position to keep their mind sharp (72%) and stymie boredom (67%). The survey found that the majority of Americans - especially those in their 40s and 50s - would rather work longer and take one-year "mini-retirements" throughout their career than work for many years without a break.

Gen Xers, who are largely unprepared for retirement, were the most likely age group to say they'd continue working for the money. The typical survey respondent between ages 40 and 59 said they plan to work 20 hours a week after retiring from their career.

Previous research from Provision Living, a network of senior living communities in the Midwest, underscores Americans' shifting attitudes around retirement. A survey of 1,000 workers over age 65 found that, on average, they don't expect to retire fully until age 72. And it's not just about the money for everyone.

Nearly 40% of the respondents said they haven't quit work entirely because they still enjoy it (45%), are trying to avoid boredom (18%), or don't want to give up their workplace camaraderie just yet (6%), among other reasons. Those who switched to part-time work - just over half of the total respondents - said they did so around age 61.

But unfortunately, working in retirement isn't possible for everybody. Not only do unexpected health crises often arise, research shows that many older Americans face age and gender discrimination when looking for jobs, reported Business Insider's Liz Knueven.

Social Security benefits may be affected when you work later

Working well into your retirement years can often help boost your eventual Social Security benefit if you claim at or after your full retirement age (between 66 and 67, based on when you were born).

But it's possible to begin claiming a reduced Social Security benefit as early as 62. If you decide to do so and you're still working, the benefit may be reduced even further if you earn over the allowable annual limit.

In 2019, the annual earnings limit is $17,640. For every $2 earned above the annual limit while a person is under their full retirement age, their benefit will be reduced by $1.

Holding a job in retirement can also affect the way Social Security benefits are taxed. While 15% of everyone's Social Security benefit is tax-free, the rest is subject to taxation depending on a person's provisional income, or the combination of all earnings in a given year, plus half of their Social Security benefits. 

If provisional income is between $25,001 and $34,000 for a single filer, or $32,001 and $44,000 for joint filers, 50% of the Social Security benefit may be taxed at the filers' marginal tax rate. If provisional income is $34,001 and above for a single filer, or $44,001 and above for joint filers, 85% of the Social Security benefit may be taxed at the filers' marginal tax rate.

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