Retirement Roadmap

Working Beyond Retirement: The Benefits of Part-Time Jobs

• Mark Fricks • Season 3 • Episode 11

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We explore the financial and emotional benefits of part-time employment during retirement, discussing how it can both extend retirement savings and provide a sense of purpose during this major life transition.

• Part-time work provides social connections and purpose when transitioning from decades of career identity
• Working in retirement can help extend retirement funds by supplementing income and reducing the need to deplete savings
• Delaying Social Security through part-time income can increase benefits by 6-8% per year
• Continuing to earn income allows for ongoing retirement account contributions rather than withdrawals
• Working part-time may help improve Social Security calculations by replacing "zero" years in the 35-year formula
• Popular retirement job options include freelancing, consulting, retail positions, teaching, and tutoring
• Creative options include renting property, selling on Etsy/eBay, blogging, creating online courses, and tutoring
• Choose work aligned with your personal interests and desired lifestyle flexibility

Schedule your complimentary consultation at masterplanretire.com or call us at 770-980-9262 to discuss your retirement strategy.

Have a topic or question you'd like Mark and Evan to address in a future episode? Email us at info@masterplanretire.com or call 770-980-9262.

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Advisory services offered through MasterPlan Retirement Consultants, Inc., a Registered Investment Advisor in the state of Georgia. Insurance, tax and commodities services offered through Fricks and Associates, Inc. dba MasterPlan Retirement Consultants.  The aforementioned are affiliated companies.

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Evan Fricks:

Should I consider part-time work in retirement? Hey folks, thanks for joining us. Welcome back to Retirement Roadmap with Master Plan Retirement Consultants. My name is Evan and with me, as always, retirement planner, Mark Fricks. So retirement looks different for everyone. When some folks retire, they're ready to cut the cord on their careers completely and dive headfirst into their new phase of life. For others, such an extreme change can be intimidating. Even if you don't necessarily need the income, part-time employment can have many powerful benefits in retirement. Today we'll discuss some of those benefits, as well as some ideas for potential part-time employment in retirement. Mark, part-time employment has a lot of benefits. We're seeing it more and more actually in retirement.

Mark Fricks:

You know, I was thinking about that before the show and I think one of the reasons, actually two reasons I have, number one is we do work with a lot of federal employees and they qualify pensions fairly early, many of them age 56, 57. That's early, you know, you're still very young. So that's, I think that's one reason. I think another reason if I can give our, our firm, a little bit of kudos here, is because of the way we work, we, we squeeze every bit of income out of assets. We've maximized the efficiency of the way we work. We squeeze every bit of income out of assets. We've maximized the efficiency of the income production and it also accelerates the ability to retire, and so I think those two things together, we are seeing more and more folks that are retiring earlier, which I think promotes the part-time work.

Evan Fricks:

Yeah, we're going to talk about how financially it can be beneficial. Before we jump into that, I think also as far as a sense of purpose for folks, it can be really hard to, like I said before, cut the cord completely and completely shift into a new phase of life, from employment which could have been decades long in a career, and then to go from nothing. People don't realize that often our jobs, our careers, are the primary social circle that we have in our lives. Our sense of purpose, especially in Western culture, is very wrapped around what we do. Oftentimes, when we meet someone new, the first thing they say "what do you do, bob? Or whatever. So it can be really shocking.

Mark Fricks:

It's part of who you are, it's part of who you've been. I've really enjoyed getting to watch our clients as they transition from working to retirement, and especially that last year, and I kind of interview them and we talk about it. I've had some clients cry because they're afraid, you know, "I don't know what I'm going to do. Am I going to just die because I've quit working or whatever? And so we've discussed that. But most of them have this mixture of emotions. They were excited, scared. "Am I going to have enough money? We show them they will. It's just all these emotions and it's really interesting.

Mark Fricks:

I find it really eye-opening to talk about all of this and to help them through that transition, because I feel like there's three segments of our life. There's growing up, you know, which could be to maybe age 25 or 30 for some folks right. Then there's those middle years of adulthood where we maybe have kids and have our major careers. You know, many of us get married and have a home. It's just kind of a different feeling and it seems like it lasts forever. Then it's over in a you know, in a flash. And then that third phase to me is retirement. Is, you know, 60- ish and beyond which now is lasting, you know, 20, 25, 30 years or more.

Mark Fricks:

Um, so if you have spent like you said, if you spent these 30 something years, 40, I mean I've worked some kind of job since I was like 10. Now I was cutting grass, but a real job since I was 15 or 16. And so all of a sudden just stop and kind of like you said, just jump off that cliff or mountain or whatever it may be. I remember a client several years ago. They were both, I think, early 60s and they both retired on the same day and they woke up the next Monday on the beach. That was their goal. And never worked again and it was perfect for them. But many folks are concerned about that again because of what's it going to do to their lives physically, emotionally and all of that. So I think this is a great subject to talk about the reasons why you might want to work part-time and maybe even some examples of what you could do.

Evan Fricks:

You also don't really know, not everyone, and this is not a reflection on a relationship between a couple, but you've spent an entire career where one person may have been out of the house.

Evan Fricks:

The majority of the day

Mark Fricks:

, or both of them out of the house,

Evan Fricks:

or both out of the house

Evan Fricks:

And all of a sudden you come back in, your dynamic might shift a little bit. Maybe easing into that is also a better way.

Evan Fricks:

What's

Evan Fricks:

that

Mark Fricks:

Might?

Evan Fricks:

Might.

Evan Fricks:

Right. Right.

Mark Fricks:

That dynamic will shift. It depends on how much right and how they handle it. You know, interesting today in today's world, so many people working from home, since COVID, it's become less of an issue. I was talking to somebody just the other day and a fairly new client and they were talking about how, yeah, I've worked from home for, you know, 15 years. My wife is used to me being here and she was a stay-at-home mom and so that's kind of a no- brainer. I'm sure he was probably in the basement or upstairs half the day, but he could come down anytime he wanted, so that would be less. But we also had a couple that actually divorced after their retirement.

Mark Fricks:

He came home and, they already had issues, Ok, this wasn't the only reason, but he came home and all of a sudden he started trying to run the household. And and and you know, and she had been running the household just fine, thank you very much, and, but it was part of other problems they had. But still, that was kind of the final straw from that. So I guess something you've got to to talk about, which is where the part-time work may come into play.

Evan Fricks:

Absolutely. So on the financial side, first of all, it's it's quite apparent part-time work can extend your retirement funds. Number one you're supplementing your income. Part-time work can provide a steady stream of income, depending on what kind of work it is. Reducing the need to deplete retirement savings quickly, so maybe you don't need to pull from those IRAs or those Roths so quickly. That 401(k) you can let those continue to grow. You have a different timeline, your immediacy. Maybe you have a little bit more of a long-term horizon, time horizon on those investments.

Mark Fricks:

Right, and I think you would touch base on this but also be able to delay taking Social Security, which will become a larger check as well. Again, I don't want to steal bullet point three or four. No, no. That pops into play as well.

Mark Fricks:

As we know and, by the way, we actually have an online webinar coming up on Social Security. Might be a great time to learn more about that, but every year you wait and delay Social Security, there's an increase in that payment of 6% to 8% for the rest of your life. So, again, that part-time income of $20,000 or $30,000 a year may allow you to do that.

Evan Fricks:

Yeah, building a financial cushion and continuing to do so if you're not using all of the income, if you're not depleting all that income per month, also able to save more, just as we're able to hopefully extend our IRAs and Roths, certain accounts like annuities, income producing accounts. The longer you wait, they tend to produce more income, so there could be more time to allow certain policies and contracts to mature before you use them. There's a lot of benefit to that. Also, just flexibility. You can choose. You have more options when you have a little bit extra income there.

Mark Fricks:

Yeah, and you touched on this, you can, as long as you have earned income, you can contribute, instead of taking money out of your IRAs and 401(k)s.

Mark Fricks:

You can contribute to those because you now have earned income again. And if you don't need a lot of it, you can put that much more. And if you create your own business, you can do something like a SEP or a SIMPLE or some kind of an IRA that has higher limits. So instead of doing $8,000 a year, if you're 50 or older, you can do $15,000, $20,000, $25,000 a year into these accounts.

Evan Fricks:

And, depending on who you are and what your strategy is for retirement, there's also opportunity for tax strategy. In that time, if you're earning part-time income, you're probably not earning as much as you were in your peak earning years right before retirement, which means you probably have more likelihood to be able to contribute to a Roth. Also consider contributions. Since you're earning less that year, the taxes on those conversions might not be as high as they would have if you were working full-time. So a lot of opportunities to explore.

Evan Fricks:

With part-time work. As Mark mentioned, you also have an opportunity to potentially wait before taking your Social Security benefits, which, as we all know, all that's going to do is let it be a little bit bigger by the time you're ready to take it. That's another strategy to keep in mind. However, a gotcha that we need to also keep in mind: If we are working part-time and we are below, we have not reached our full retirement age for Social Security. Most of you, that's age 67. Most of us 67, right.

Evan Fricks:

If we've not reached our, what is it, FRA? Full retirement age, then there's a limit to how much you could earn per year, and this year it's a little over $23,000.

Mark Fricks:

So that's money you're going out and getting a W-2 or 1099 because I work for somebody, okay, so you have to be careful with that. That's another reason not to turn on Social Security if you're working part-time and think you'll make close to that or a little bit above that, or maybe a lot above that as well. So that is something you have to be careful of and I think you're going to mention this later. So, um, you also may actually be able to add to your Social Security account. So, yeah, you know, in many cases not, because, uh, basically, your Social Security is, uh is a formula that includes your highest 35 years of earnings, Social Security, FICA earnings.

Mark Fricks:

Okay. So probably, if you're making $30,000 a year part-time, you've made more than that most of those 35 years. But think about this: If you retired at 60 and you only have 30 years of FICA earnings, you have five zeros. So putting something in those zeros even if it's only $25,000 or $30,000, could potentially increase that expected amount, not only because you waited, but because there's more money in your bucket. That's right. So possibility.

Evan Fricks:

And again, it's all strategy, all timing, everyone's different. But if you're thinking, well, if I'm working part-time but I can't take Social Security, why would I retire? But if you could maybe spend down some of that IRA money early and you can delay Social Security, not only are you getting a bigger guaranteed Social Security check, but you are lowering your RMDs in the future.

Mark Fricks:

There's just a lot of angles to look at. Yeah, just another way to get some of that IRA money down, whether it's converting to a Roth or some other tax-free type of account. Or again, people do not realize the impact of required minimum distributions. So, starting at age 73 to 75, depending on your date of birth, you know, by that time maybe your IRAs have built up quite well. That RMD, I mean we've got clients having to take out $20,000 a year.

Mark Fricks:

We have others having to take out $60,000 and $80,000 a year on top of their other income required fully taxable. So having a tax strategy early can be really helpful.

Evan Fricks:

If you want to discuss your own retirement or are curious about what your retirement would look like, especially with part-time employment, feel free to reach out to us at masterplanretire. com. You can schedule your complimentary consultation there. It'll actually take you directly to our calendar to find a time that works best for you. gain, that's masterplanretire. com or call us at the office, 770-980-9262.

Mark Fricks:

Hey I was thinking about something this morning on the way in. Just want to mention, if you're driving around listening to this show or at home listening to this show, keep in mind that we have many, many episodes that we've already recorded on every subject that you can just probably go to your pocket it's probably in your smartphone. All the major podcast servers have our shows on there. You can go to our website and many, many past shows, all kinds of topics on there. So if you're loving today's episode, look back. Also on our website or the YouTube same episode you just get to see us.

Mark Fricks:

Okay, I don't know if that's a positive or a negative, but there you go. So if you're not liking today's show, there might be a better show on the podcast as well. So look back and see if it's something you like better, but I'm sure you're loving it, so let's keep it up. Again, masterplanretire. com also a great place to go to schedule a time to meet with us to discuss your situation, your goals, your concerns, your fears and that's complimentary, so take advantage of that.

Evan Fricks:

So we discussed some of the benefits to part-time employment and retirement whether financial or emotional, psychological things like that. So how about some ideas for part-time employment in retirement? I love this part. Yeah, so we do see a lot of different options. Obviously, everyone's got a different situation, different skill sets, but sometimes I'm really surprised by the things people find that they are interested in and they end up doing for work. So we're just going to run through a list of things, kind of talk through it, maybe give some ideas from our own experience with interaction with our own clients.

Mark Fricks:

Well, the first thing I would do is look at myself and say what do I really enjoy doing? Yeah, and.

Evan Fricks:

If you have the freedom to do that. What an excellent opportunity.

Mark Fricks:

Yeah, yeah, so I've always wanted to.

Mark Fricks:

I love plants. I've always wanted to work with plants. I'm going to get a part-time job at Pike Nurseries or Home Depot or whatever. So we're going to go through these, by the way, but that's the first thing I would do. Is what would I look forward to getting up? Maybe the job I've had in the past, I just got tired of it. So what do I want to do? What would fulfill me and still give me flexibility to do the other things I want to do? So take off there.

Evan Fricks:

Number one part-time or freelance work. So freelancing. If you have a particular skill, whether it be writing, graphic design, consulting, web development, freelancing can offer flexible work without the commitment of a full-time job. I have a gentleman.

Evan Fricks:

I've been speaking to who's become a friend. Actually he is an audio engineer at a radio station, but he also has picked up for years before he worked at the radio station he's at now.

Evan Fricks:

He's just worked out of his home, he's got his little setup. He's really fast and the amount he can churn out in a short amount of time as far as voiceover work, commercials, things like that, that's something that he can carry with him from home, basically whenever he wants. Exactly. Whenever he wants.

Mark Fricks:

Under his own terms and the whole thing.

Evan Fricks:

Yeah, so if you have skills that are similar to that, we have another client, without mentioning any names, but after he retired, his company or a similar company, brought him back on for consulting and it was incredibly lucrative that him stepping in as a consultant.

Mark Fricks:

It probably didn't have the benefits, right, like health insurance and stuff, but they make up for it, yeah, and if you're 65, you've got health insurance and, also, even though they may not have a 401(k) for you, again, you have earned income. You can do your own IRA or Roth or something like that. So, yeah, that's a great example.

Evan Fricks:

Really many retirees take part-time jobs in retail, customer service or teaching. These can provide steady income, reliable income with fewer hours.

Mark Fricks:

Yeah yeah. I'm not sure what examples you want to give. I'm going to give some examples I've seen over the last several years. This was not a client. I was at an auto repair shop and I noticed this auto parts store. Their truck pulled up, obviously delivering a part that they were working on a car with, and this gentleman that looked to be in his 80s climbs out, delivers the part, gets back in and drives back. What a great job. You know to just be delivering parts around town. It's better than delivering pizzas, which may be fine for you too, by the way. I'm not cutting it down. In my world, I'm not sure. Cause its daytime and that type of thing.

Mark Fricks:

Another example was again kind of the plant thing. I had a client, a female client, loved plants. She got a part-time job with a company that took care of plants in corporate buildings. And she'd go in and water them, pull the dead leaves off, things like that. It was like three days a week. She loved it. So just a couple of examples that popped in my head. I'm sure more will enter my brain as we continue.

Evan Fricks:

Number two: rent out property or space. You know a lot of people. I've been speaking to someone yesterday actually two separate client meetings yesterday. One gentleman is about five years from retiring and he's using this opportunity now that he's at his peak earning years, to start developing rental properties, things like that, so that he has something to carry him through retirement.

Evan Fricks:

So, whether you want to rent a building, rent a space, I have clients I spoke to yesterday as well who have been, they have an extra apartment in their home that they have been letting their children stay there for a reduced rate. Now all their children are on their own and they're independent. They don't need that for their children anymore, so they're looking at ways to rent that out and rather than Airbnb or Vrbo or some of these that you know, you've got some that you see some positives and negatives to those. They actually turned me on to a nurses only or healthcare worker rental site. The Traveling Nurses, which is amazing because, one, they typically aren't home most of the time other than to sleep. So, and then there's also a little bit more accountability because it's that nurse's site. Interesting options. All the best ideas come from the clients anyways.

Mark Fricks:

So they tend to be, you know, take care of property and things like that. Don't have to worry about somebody trashing your place, probably not having wild parties at night. But a great little basement suite with a separate entrance is a great setup. But yeah, that's a great idea.

Evan Fricks:

If you've not already considered renting that out in the off season or when you're not using it, that's also a great option as well.

Evan Fricks:

I've got online businesses here.

Evan Fricks:

There are a lot of different e-commerce stores that you can start, handmade goods, we all know about Etsy, vintage Items. You can source them, find them. You can do your own online boutique shop and actually choose your items. There's a lot of options there, especially if you are crafty or there's a hobby or you have a skill or a talent in a craft type of art or something like that.

Mark Fricks:

Well, eBay as well. It's kind of old-fashioned, but people sell all kinds of things on eBay, and I enjoy going to antique malls. So I've bumped into a few retired folks that have rented a booth.

Mark Fricks:

And their hobby is, during the week, going and finding antiques and then bringing them in and selling them in the booth. They don't have to be there all day. They come in maybe on Saturday morning, maybe straighten things up, add a few items, then leave, and somebody else is there, you know, running the cash register. And I mean I don't know what they make. But the booths I've visited are there for a long time. They're not moving in and out, so they must be making some money.

Evan Fricks:

Well and even blogging and YouTube, online blogging, YouTube videos. If you enjoy writing or making videos, you can monetize your content through ads, sponsored posts, affiliate marketing, things like that. It does typically take a little bit of startup time to build that audience, but that's certainly a viable option.

Mark Fricks:

But there are consultants, by the way. That will teach you and help you get that promoted. Yeah, you know, and you have to pay them some money, but it shortens that timeline of getting your content out there. So that's great as well.

Evan Fricks:

Number four: another option will be investing. We talked a little bit about real estate investing, but we've got investing in things like dividend stocks. That is helpful. However, you must keep in mind dividends are not guaranteed, so if you're looking at a guaranteed monthly income, dividends could be a little bit tricky.

Mark Fricks:

A lot of our clients will keep a little pot. We're managing most of their money. But they'll keep a little pot of money to kind of play with and I don't know. Buy some Bitcoin and buy a little bit of dividend stock and try to find the next up-and-coming company or something like that. We've got one client that has developed an entire system and he was really really doing well until one point. Then the market went sideways. But still he's done fine and he enjoys it.

Evan Fricks:

peer-to-peer lending, so platforms like Lending Club that allow you to lend money to others and earn interest?

Mark Fricks:

Well, I don't think there's a guarantee, but yeah, again, this would have to be money you're not afraid to lose. Yeah, but it would definitely, I think is an opportunity, maybe a miniature angel investor type of thing situation, depending on how much money you have. Just talking to friends and family and things like that, of folks that you know that might want to start a business. That's great. At least you know who they are, their character, things like that. Again, be careful, you know. There's one thing you said you know never lend money to a friend, you know. But so make sure everything's in writing and it's for a specific purpose. They have a business plan, all that kind of good stuff. But certainly an opportunity. Again, just don't put out so much money that you harm your retirement.

Evan Fricks:

Right so number five: teaching and tutoring. Online tutoring if you have expertise in a subject you can teach or tutor online. There are platforms like VIP kid or chegg c-h-e-g-g where you can tutor students. Music and art lessons if you have artistic or musical talent, consider teaching lessons in person or online as well. It's amazing how many artists have moved, especially with Covid, with the shutdown on venues and everything else, moved to online lessons. There's so much available now as far as...

Mark Fricks:

It's so much easier, you don't have to travel. You don't have to, you know, the musician didn't have to rent a room and I don't know. It's a great idea. I love the way things are moving that direction. So absolutely, yeah.

Evan Fricks:

S elf-publishing. You a writer? Do you love to write? Have you ever considered publishing? Putting on Amazon Kindle Direct? They allow you to publish and sell books online, often with a flexible schedule. Guides, books, memoirs. They can provide passive income if they sell over time.

Mark Fricks:

That's a great idea. You know a lot of our clients travel and some of them just go to some exotic places. What a great idea to write a travel blog about where they go and then share those experiences and helping other people see the world or tips on how to travel to that particular place. I like that.

Evan Fricks:

Number seven: sell crafts or hobbies. We talked about that a little bit with Etsy. Etsy shop. If you like knitting, painting, woodworking, really anything it's amazing what you can find on there.

Evan Fricks:

But it's something I didn't consider photography.

Mark Fricks:

I think I'd heard that a long time ago, but I had never really followed up with it. That's the great idea, though. I know I've purchased things off of there and somebody had to take that photograph right?

Evan Fricks:

But another really cool one is create an online course. That reminds us of another client of ours who's earning a lot of income because he created an online course.

Mark Fricks:

It's so cool and it's actually a course that is required to be taken. It's a continuing ed course. Won't name the profession or anything like that, and he does it with a touch of humor. So basically, once he gets these 10, 8, 12 courses recorded, people buy them and they pay through PayPal, and really he's not doing anything else, he's just collecting money for this continuing ed course. And they get great reviews too. They do, yeah, they really do. So well, I think we're out of time. We appreciate you joining us today. Remember our podcast as well as our radio show on YouTube. But I guess the best thing to say now is schedule an appointment, masterplanretire. com, and until we see each other again, plan well and prosper, take care.

Mark Fricks:

This was Retirement Roadmap Radio with Mark Fricks of Master Plan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire. com or call 770-980-9262.

Disclosure:

All matters discussed during this show are for informational purposes only. Each individual situation may vary and the opinions expressed here may not apply to everyone. Materials presented are believed to be from reliable sources and no representations can be made as to its accuracy. All ideas and information should be discussed in detail with one of our qualified representatives prior to implementation. Advisory services offered by MasterPlan Retirement Consultants a Registered Investment Advisor in the state of Georgia, Mark Fricks and MasterPlan Retirement Consultants are not affiliated with or endorsed by the Social Security Administration or any other government agency.