June 15, 2020

Edited 07/30/20

Part-Time Jobs for Retirement and the Impact on Retiree Benefits

Grow your retirement savings with part-time income but have a plan to avoid impact on your retiree benefits.

As one nears retirement age, many people want to continue work with fewer hours, more flexibility and less leadership responsibility. However, after many people retire and are done with full-time career pursuits, they still may have the energy and desire to do some work. There are many part-time jobs for retirement. However, if you’re receiving part-time income, it’s important to know the impact on your retiree benefits from Social Security, Medicare, and RMDs.

A part-time job helps you stay active while in retirement and it can also be a great way to increase your retirement savings. For example, if you can add an additional $2,000 of part-time income per month between the age of 62-75, you can increase your retirement savings up to $215,000. There are countless options for part-time jobs that would help you bring in some money without a hectic schedule and additional stress. Look for a part-time job that suits your interests and skills. 

As quarantine restrictions begin to lift, it’s important to continue to practice social distancing for the safety of ourselves, our families, and the communities around us. Here are some options for remote and no-contact part-time jobs that will help you earn income and remain safe:

Part-Time Remote or Contactless Jobs

Transition to self-employment or contract work within your established career field

If you wish to continue your career but are hoping to ease into retirement by working part-time, transition into self-employment or contract work. That way, you’ll continue to grow and use your expertise while being able to remain at home. Additionally, with platforms such as Zoom, Slack and GoogleHangouts, working from home can be extremely efficient and productive. 

Teach Online

There are many virtual classrooms you can teach or create your own tutorial videos to earn money at any time. Outschool, VarsityTutors, and SkillShare (get 2 months free with our exclusive offer), to name a few, have an online teaching community that ranges from academia to creative hobbies. You can teach a variety of subjects you’re passionate about such as academic courses, cooking classes, crafting, and more. Of the thousands of subjects available, choose one that most interests you and start earning income while remaining at home. 

Take Online Surveys 

Online surveys help you earn extra income while allowing you to voice your own opinion. However, it takes time and multiple surveys in order to make a substantial amount. Sites such as Swagbucks and i-Say are great starting points for you to earn cash rewards. To avoid overwhelming your inbox, create a new email designated for survey-taking and remember not to give away any sensitive information. 

Deliver Food

If you have a vehicle and want to earn money quickly, there are several no-contact jobs available such as delivering food. With a recent increase in deliveries, there are several delivery jobs available on platforms such as DoorDash, UberEats, or even your local restaurants. While this requires you to venture out of your home, these jobs are no-contact and can be safe as long as you remember to abide by the company’s guidelines.

Benefits of Part-Time Jobs In Retirement

There are many benefits to keeping a part-time job in your retirement years, including:

  • Increased social interaction and avoiding social isolation.
  • Keeping busy and meeting new people.
  • Income to pay for your needs and wants.
  • Satisfaction from fulfilling work that you enjoy doing.
  • Increased physical activity, which brings health benefits.
  • As a part-time worker, you can contribute to a 401(k) plan if you work at least 1,000 hours in one year, or 500 hours in three consecutive years.

Consider how much time you want to devote to part-time work, travel and visiting family. Some retailers, including CVS and Home Depot, have snowbird programs where part-time workers can transfer to a different branch or location during the winter.

Impact on Social Security Benefits

You can work part-time and collect Social Security, but your income might reduce the amount of your benefit. 

If you are under full retirement age for the entire year, Social Security will hold back $1 from your benefit payments for every $2 you earn above the annual earnings limit. For 2020, that limit is $18,240. When you reach full retirement age, Social Security will begin making up for the withholding by giving you credit for the months when you lost benefits.

After full retirement age, there is no cap on how much you can earn and still collect your full Social Security benefit. Full retirement age is 66 or 67 for most people. 

It’s better to delay your Social Security benefits if you can subsidize your part-time income to pay for your expenses. By delaying your benefits, you can receive the maximum benefit from Social Security while continuing to earn part-time income.

Impact on Medicare Costs

If you earn above a certain amount, you may have to pay a higher premium for Medicare Part B and Medicare Part D. For 2020, the premium surcharge kicks in after your income exceeds $174,000 per year for a couple or $87,000 for an individual. 

It’s wise to keep that extra expense in mind when you decide whether it’s worthwhile to keep a part-time job. If your income is close to the threshold, it may be better to reduce your hours or take less work, so you don’t have to pay the higher Medicare premiums. 

Remember About Required Minimum Distributions (RMDs)

Your income will change when you reach the age you’re required to take Required Minimum Distributions (RMDs) from your retirement accounts. 

You must start taking withdrawals from your 401(k), IRA, SIMPLE IRA and SEP IRA when you reach age 70½. However, under a new federal law called the SECURE Act, if your 70th birthday is July 1, 2019 or later, you do not have to take withdrawals until you reach age 72. 

If you don’t withdraw the required amount, or if your distributions are not large enough, you may have to pay a 50 percent excise tax on the amount not distributed as required.

Roth IRAs do not require minimum withdrawals until after the death of the owner.

Part-time Income on Taxes and Benefits

It’s important to understand how RMDs and part-time income might affect your Social Security benefits and Medicare premiums, especially if you are already close to the taxable income limit. Your Social Security benefits can be taxed based on your provisional income—which include part-time income, RMDs, and half your Social Security benefits..

Your income from a part-time job, combined with your required distributions, might push you into the income category where you receive less from Social Security and pay more in Medicare premiums. 

To avoid being taxed on your Social Security benefits, you will need to keep your provisional income under $25,000 to receive all your benefits

Timing is crucial when you’re making your decisions about whether to keep a part-time job and when to start taking Social Security. The best way to secure your financials is to use Silvur to calculate your part-time income with your retirement savings. With Silvur, you’ll be able to get the timing right, stay mindful of the income limits, and maximize the benefits you receive.