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Does It Pay to Work Past Age 65?

 Posted on September 14, 2016 in Estate Planning

Lombard estate planning lawyerIt seems that, with each generation, the golden age of retirement increases. Decades ago, many people retired at 62. Then that number was pushed to 65, where it hovered for quite some time. However, over the past few years, many people are encouraged to keep working until they are at least 67 years old, or even older. But, does working past 65 help or hurt your retirement objectives or your estate planning goals.

There are benefits to continuing to work past 65. You will be adding more funds to your retirement accounts and allowing the interest to accumulate. The longer you are earning income, the shorter the time will be that you will actually be relying on retirement funds to support you. If you do keep working, however, there are definitely issues you will have to address in order not to be penalized.


The first issue is Medicare—a federal program designed to provide health care coverage for those 65 and older and the disabled. It is important that you sign up for Medicare on time. A person is eligible to enroll during a seven-month window that begins three months before their 65th birthday. If you miss this window, your premiums for Part B will be 10 percent more for every 12-month period that you delay your enrollment.

If you are covered by either your own group medical plan or your spouse’s group plan during your enrollment period, you can avoid the late penalty by enrolling in Medicare while you are still covered by the group plan, or within eight months of leaving your job or losing group coverage.

Social Security

If you do work past 65, you will be adding to your Social Security retirement benefit. People who were born after 1959 are not eligible to receive their full benefit until age 67. For every year you delay retirement up until age 70, your benefit will increase by 8 percent.

People who choose to sign up for Social Security before their full retirement age, but still continue to work, may find part or all of their payment temporarily withheld. For those beneficiaries younger than retirement age, $1 in benefits will be withheld for every $2 they earn if their earning total over a certain amount. This threshold amount is adjusted every year.

Retirement Account Withdrawals

Most retirement accounts require owners to begin withdrawing funds and paying income tax on those funds six months after a person turns 70 years old. However, with many plans, that is not the case for those who are still working. If the person has retirement accounts with former employers, they will be required to begin making those withdrawals, or else face a 50 percent tax penalty for failing to withdraw the correct amount of funds.

Discuss Your Plans With a Qualified Attorney

For many, working past retirement age is not always an option, but a choice, in order to continue to make ends meet. For others, continuing to work is a way to stay active and occupied. Either way, additional working years can make a dramatic difference in the assets that you will be leaving your prospective beneficiaries. That is why it is crucial to begin retirement and estate planning as soon as possible. Contact an experienced DuPage County estate planning attorney to discuss your family’s current and future needs. Call A. Traub & Associates today.



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