How Money Is Generated During Retirement
A study by the National Institute for Occupational Safety and Health from 2009 shows that a larger portion of the workforce will be older workers as this group stays longer in the workplace. Economic realities and changes in retirement benefits, including Social Security retirement age advancement, contribute to the need for older Americans to generate money. Some seniors draw retirement and continue employment; others find new sources of income.
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Time Frame
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Retirement may start as early as age 62 or as late as 70 for Social Security benefits. Retirement at less than full retirement age will reduce retirement benefits for Social Security and some other retirement plans as well. Social Security penalizes an early retiree for income over $14,160 in 2010, discouraging early retirement for some. No penalty exists at full retirement age with Social Security, so the worker is encouraged to make money and collect retirement. Full retirement age in 2010 is age 66 for workers born between 1943 and 1954, progressing to age 67 for those born later.
Considerations
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Health and physical condition may determine how the retiree generates money during retirement. Need may also be involved. Planning for retirement with income streams provides the most security for the retiree. Social Security benefits provide about 40 percent of the preretirement income for the retiree. Seniors need about 80 percent of preretirement income, according to the Social Security Administration. Social Security recommends supplementing benefits with interest, a pension plan and investments. Unearned income provides income without employment for the retiree, but many retirees need more. With costs rising, few retirees can afford to stay home.
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Significance
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Living on 40 percent of preretirement income is no longer possible, as Social Security does not provide 100 percent of the retirement needs of seniors. As retirees live longer, they may outlive their money. Generating additional funds gives new meaning to the term "freedom to live." Leaving an inheritance of credit card debt and a reverse mortgage loan may not be what relatives expect, but may be what they get.
Potential
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Retirees often work at a hobby for a part-time income, either at home or on location. A plant lover may work at the local nursery watering and caring for flowers, or may grow flowers at home to sell. Selling assets generates money for the retiree, making a lifetime of collecting worthwhile. Selling items no longer needed can be lucrative, particularly vehicles and rolling stock or older items no longer available at retail. Some retirees work online as an income source, selling items or selling services such as programming or writing.
Types
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Social Security, along with investments, pensions and income-generating tasks gives seniors money needed for retirement. Some investments created specifically for retirement funding include annuities, traditional individual retirement accounts IRAs or Roth IRA accounts, and traditional and Roth 401k accounts. Retirement investments can continue to generate income and interest during retirement years. A savings account or 403b provides another income stream for seniors. Seniors need many sources to make up the 40 percent of preretirement income needed in addition to Social Security.
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