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Working in Retirement Checklist
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Americans are living longer, and in a world where the average 65-year-old can expect to live well into his or her 80s, what were once known as the post-work years have become the springboard for new, fulfilling journeys—each different from the other.
While everyone's goals and circumstances will be different, it's also a fact that continuing to work will affect your assets and may require new, careful strategies for managing your income. Here are some things to think about when considering working into your later years.
Understand your startup costs
Perhaps retirement is your chance to transform an interest or a passion into part-time work. However, that transition can come with a price tag, and it's best to be prepared for it in advance—ideally while you're employed and outlining what your retirement income and spending needs will be. You may realize, for example, that you'll need additional training or education.
If your plan involves starting a business, you also need to consider capital costs. It may be harder to get a small-business loan after you've retired because you'll likely have fewer working years to repay the money. Consider both public and private sources of capital; new, innovative forms of raising capital, such as crowdfunding sites, can also prove useful—
particularly if you're planning to start a nonprofit enterprise or a venture related to the arts.
If you expect to be at least age 59½ when you launch your new venture, you can tap IRA funds, minus applicable taxes on the withdrawals, for startup capital. (Earlier withdrawals would be subject to ordinary income taxes and possibly additional federal taxes.) However, your startup budget shouldn't depend on funds you've set aside for your baseline retirement income needs.
Relocate with an eye toward your work life
If working in retirement is a priority for you, remember that location can have a major impact on expenses and quality of life. There are states that offer low unemployment, high job growth potential, a lower cost of living and a favorable tax environment—but they may not always be the best place to pursue the type of postretirement career you're considering.
Many retirement locales heralded for having no state income tax generally have higher sales and property taxes, and there may be municipal taxes to consider as well. If your local taxes are high but you want to stay in the same area, consider moving to the next town over or relocating just across a state border as one option.
Rethink when you take Social Security
If your new paycheck allows you to delay taking Social Security, you should consider it. Postponing Social Security payments can significantly boost your available retirement income when you most need it. Each year you delay, your total benefits could increase by as much as 8% per year until age 70, when you earn the maximum. For example, a man who expects to take home $1,955 per month at age 62 can increase that to $2,607 by waiting until age 66 (his full retirement age), and to $3,441 if he delays until 70.
Take a close look at your insurance needs
The cost of health insurance rises with age and changes in health status. That means it could well be a significant expense, especially during the years before you turn 65 and qualify for Medicare. If you retire from your primary career before then and work independently, you'll need a plan for covering your medical and dental insurance.
COBRA coverage may be available through your current employer's health plan; if so, you may be able to purchase as much as 18 months' worth at a lower premium than what you'd pay if you were buying on the open market. If you plan to work elsewhere, do your research and look for companies with generous benefits packages, or else negotiate opportunities so that health care compensation is part of the deal.
Make sure to assess any other insurance needs and budget for them. A job that requires a lot of physical effort (such as running a farm) or travel may require insurance that takes such things into account. You need to take into consideration health care insurance, disability insurance and possibly long-term care insurance to help ensure that a health event won't have a catastrophic effect on your wealth.
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Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

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