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10 Tips for Working in Retirement

By U.S. News & World Report

Second career

A retirement job might allow you to delay tapping your retirement savings or even boost your nest egg. Working in retirement also affects how much you will receive from Social Security and your tax rate. Here are ten tips for making the most of a retirement job.

Delay 401(k) withdrawals.

Traditional IRA and 401(k) distributions are typically required after age 70 1/2 and income tax is due on each withdrawal. However, if you continue to work after age 70 1/2 and don’t own 5 percent or more of the company you work for, you may be able to continue to defer withdrawals on your current 401(k) plan (and the resulting tax bill) until April 1 of the year after you retire.

Bump up your retirement savings.

Workers age 50 and older are eligible to contribute more money to retirement accounts and qualify for a bigger tax deduction. Older employees can save up to $24,000 in a 401(k) account in 2017, $6,000 more than younger employees. IRAs also allow older workers to make catch-up contributions worth an additional $1,000 per year. Income tax won’t be due on your traditional retirement account contributions until you withdraw the money from the account.

No more IRA tax break

Most people with earned income are eligible for a tax break if they save in a traditional IRA. However, workers age 70 1/2 and older no longer qualify for a tax deduction by making a traditional IRA contribution.

Watch out for Social Security withholding.

If you work and collect Social Security benefits at the same time before your full retirement age (66 or 67 depending on your birth year), part or all of your benefit could be temporarily withheld. If you earn more than $16,920 in 2017, you’ll lose $1 in Social Security benefits for every $2 in earnings above the limit. In the year you turn your full retirement age the earnings limit increases to $44,880, and the penalty decreases. However, once you reach full retirement age there’s no penalty for working while receiving Social Security payments, and your benefit will be increased to reflect your continued earnings.

Your Social Security benefit could become partially taxable.

If you earn more than a certain amount in retirement, your Social Security payments could become taxable. Income tax will be due on a portion of your Social Security payments when the sum of your adjusted gross income, nontaxable interest and half of your Social Security benefit totals more than $25,000 ($32,000 for couples).

Boost your Social Security earnings.

Social Security payments are calculated based on the 35 years in which you earn the most. If you earn a higher salary now than you did earlier in your career, you could boost your Social Security payments going forward. This strategy is especially powerful if you haven’t yet worked for 35 years and had one or more zero earning years factored into your Social Security benefit calculation.

Consider delaying your Social Security payments.

If you continue to work during your 60s and earn enough to pay your bills, you might be able to delay signing up for Social Security. Monthly benefit payments are increased for each month of delay up until age 70. These higher payments last for the rest of your life and can be passed on to a surviving spouse who gets a lower payment.

Don’t forget to sign up for Medicare.

Medicare eligibility begins at age 65, regardless of your employment status. The government adds a late enrollment penalty to your Medicare Part B and D premiums if you sign up later. If you are working after age 65 and receive group health insurance through you employer, you need to sign up for Medicare within eight months of leaving the job or the health plan to avoid the penalty.

Look for a job that provides more than money.

In addition to the paycheck, a job provides retirees with opportunities to socialize and physical and mental stimulation. Some jobs also give retirees a sense of purpose and the opportunity to help someone else.

Find a better work-life balance.

Few retirees want to keep working full time. Most older workers want a flexible schedule, which might mean working part time or part of the year. Sometimes retirees take a career break to relax before beginning a new venture.

More from U.S. News

6 Social Security Calculators That Can Help You Decide When to Claim

10 Social Security Claiming Strategies That Work

10 Tax Breaks for People Over 50

10 Tips for Working in Retirement originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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