How to Avoid Working Part-time During Your Retirement

You’ve made it! You’re out of the labor force and enter into your retirement. You’re gathering Social Security and attempting to offset your new way of life with your funds.

A pandemic is still playing out, high inflation, a bear market, dangers of a downturn, and high inflation. Retirees seem to have an endless list of problems. Look at your grocery, gas, or any other bill; they have all increased. 

As you look at your budget, you realize you’ll either need to withdraw more from your already heavily reduced 401(k) balance, or skipping meals might become necessary. You will receive a cost-of-living increase from Social Security in 7 months. If inflation keeps rising, will it be enough?

When you were young, Retirement was something to look forward. Our society sold you the idea of peaceful days and traveling to a foreign destination.  Covid-19 has halted international travel, and inflation has turned retirement into a nerve-racking experience.

A staggering 3.2% of retirees of last year are already being pushed back into the workforce, which is about 1.7 million individuals. According to the Federal Reserve, another 2.5 million people were unprepared for retirement and may have to return to work. This trend is accelerating with record inflation, with more Americans becoming unprepared for retirement than ever before. 

To offset the cost of living, many retirees are considering working. They don’t immediately jump back into full-time employment. It is less likely that you will be hired; if you are, they are not willing to pay you what you demand at the end of your career. Most ex-retirees work part-time to pay their bills, earning a fraction of what they made before retirement.

Now is the time to work on avoiding this trend. While saving for retirement or in the middle of retirement, you can make adjustments.  One example of this would be your stock portfolio. Many people have investments that do not pay them dividends and are hoping to survive by selling pieces of their portfolio piecemeal.  During a bear market, it is a great time to reorganize your portfolio. Get rid of passive index funds and acquire individual preferred securities, CEFs, and pass-through entities.

Income is what you need now, not capital gains with meager dividends. Put your money into investments that will yield income right now. When you invest for income, you can create a long-term income generator.

Income-producing investments are a good idea. Your dividends keep coming no matter how good or bad the economy is. In other words, you do not need to worry about the market’s daily fluctuations to time your exit. As you collect dividends, you reinvest so that your assets keep growing. As a result, a new source of income assists with paying bills, making grocery store trips easier and increasing your budget.

Being forced back into the job market is not a position you want to be in when you retire. It is worth it to talk to a financial advisor to learn which income vehicles can work the best for you in this type of market. Because some options may have changed since you started your retirement portfolio, an advisor should know about current changes and what options are available to secure a better revenue stream when you retire