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Ten tips: What you need to know if you work past age 65

By Times staff writer
© St. Petersburg Times
published October 6, 2002

If you're among the more than 4-million members of the U.S. work force who are 65 or older -- or if you're concerned that you will be because your retirement savings have taken such a hit -- consider these tips.

* * *

1. REFLECT ON THE ADVANTAGES. When you work past 65, you can keep adding to your retirement nest egg, obtain health insurance to supplement Medicare and draw your full Social Security benefit no matter how much you earn.

2. WHEN TO WITHDRAW. You may be tempted to postpone drawing on Social Security, with the goal of getting a larger monthly payment down the road. Bear in mind that the sooner you start collecting, the longer you'll receive payments. The same principle applies to a defined-benefit pension from your employer.

3. WHEN NOT TO WITHDRAW. If you have a tax-deferred retirement plan, such as a 401(k) or an individual retirement account, you can give your money more time to grow tax free by delaying withdrawals. Do this if you can afford to live off your salary and Social Security.

4. KEEP ON KEEPIN' ON. When you turn 701/2, you must start withdrawing money from your retirement plans in order to avoid hefty taxes -- that is, unless you keep working for your current employer. Your retirement plan provided through your employer can keep growing tax-free as long as you work there.

5. NO NEED TO WAIT. Another reason to stay with your current employer is that you're likely already vested in your retirement plan there. If you go to a new company, be prepared to wait up to a year to sign up for a retirement plan.

6. CONSIDER HEALTH INSURANCE. If you switch to a new company, you may have to wait 30 days to sign up for its health plan. To ensure that your pre-existing conditions will be covered by the new employer's plan, don't go without insurance for more than 63 days. After that, you lose certain federal protections.

7. GO SOLO. Think about starting your own business if you aren't able to stay with your current employer. You'll have to start making withdrawals from your retirement plans when you turn 701/2, but in the meantime you'll be able to save additional tax-deferred funds to make up for it.

8. LOOK INTO SIMPLE AND SEP IRAs. If you decide to start your own small or home-based business, read up on SIMPLE IRAs, or Savings Incentive Match Plan for Employees of Small Employers IRAs, as well as SEP IRAs, or Simplified Employee Pension IRAs. Either one could be perfect for your situation.

9. THE BEAUTY OF MEDICARE. Most small business owners pay exorbitant amounts for health coverage, but yours will be subsidized through Medicare if you're over 65. You'll also be able to deduct health-coverage expenses on your tax return if you're a sole proprietor.

10. THINK SMALL. Another option altogether is to go to a smaller company with fewer than 250 workers. Such companies may provide extra perks, such as a flexible work schedule.

-- Compiled by Laura T. Coffey. Sources: Consumer Reports (; Social Security Administration (

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