What If I Want to Continue Working In Retirement?

It's a plain fact of life that millions haven't saved enough for retirement. The unstable job market and economy, low savings rates and small return on investments, means many Americans must consider working in retirement.

For some, it's a way to supplement their Social Security, receive health benefits and pad their savings to continue to live a certain lifestyle. Of course, it may also be a great way to simply stay busy, interact with people and be involved in something that's meaningful. If you're faced with the fact that you may have to work in your golden years, rest assured that there are plenty of other seniors who are working and able maintain a stable way of living.

Here are some things to think about:

If you are over 70 1/2, you must make a required minimum withdrawal (MRD) each year from your IRA. When you reach this age, the government wants you to start paying some taxes, so you must take money out. At 70 1/2, previously untaxed money sitting in your retirement plans and traditional IRAs will start to be taxed. (Only money in a Roth IRA can continue to avoid being taxed.)

Perhaps you'd like to delay receiving your Social Security while you continue to work. The longer you wait to receive these payments, the bigger your eventual monthly check will be, up to the age of full retirement, which is 65 or 67 (depending on your date of birth). Additionally, if you can delay dipping into your IRA or 401(k), you'll give those accounts more time to grow -- which is the best thing you could possibly do for those nest eggs.

While you are working, your earnings will reduce your benefit amount until you reach your full retirement age. If you are under full retirement age for the year, you will get $1 deducted from benefit payments for every $2 you earn above the annual limit, which is $15,120 for 2013. If you will reach full retirement age in 2013, the limit on your earnings for the months before full retirement age is $40,080. (If you were born in 1947 or 1948, your full retirement age is 66 years.) Here's the good news: starting the month you reach full retirement age, you can get your benefits with no limit on earnings.

As a senior, health insurance is extremely important. Coverage under Medicare doesn't begin until age 65, so if you retire before then and need health insurance, taking on a job might be a good option. It would be most unfortunate if you were in an accident or suddenly became ill and had to pay for your medical costs with your retirement funds.

Even if you have Medicare, bear in mind it doesn't cover 100% of your healthcare related costs, such as prescription drugs. Having access to both your work insurance and Medicare may lower costs for you.