Social Security provides a valuable post-retirement income source for many Americans today. It also provides workers with disability insurance if they become incapacitated and supports families following the death of the main breadwinner.
Created by the Social Security Act signed by President Franklin Roosevelt in 1935, Social Security remains one of the most effective, popular programs implemented by the US government to date.
For a young US worker with an average income, two children, and a spouse, Social Security effectively serves as a life insurance policy offering a face value of more than $725,000. Even with all its advantages, however, relying solely on Social Security for a post-retirement income stream will leave most retirees woefully short.
Embarking on a Second Career
With average life expectancies on the rise and impressive improvements in health care, Americans are working longer. According to statistics from the Retired Brains retirement planning website, 86% of business professionals plan to continue work after reaching retirement age. Many will seek out new career paths.
Second or “encore” careers can provide a valuable boost to retirement income as well as an interesting vocation. Many mature adults seek out training in their spare time to develop new skills while still maintaining their role in their current profession. In terms of planning a second career, there are several important factors to consider.
Interests and Skills
People who embark on a second career are often motivated by more than just money. A second career can be a valuable opportunity to pursue your interests and passions. However, it is important to carefully match your interests and skills when choosing the right career avenue to pursue.
Ideally, you would begin planning your second career while you’re still working, to ensure a smooth transition from one career to the next. For some, working as a freelance consultant in their current field is an obvious choice for an encore career—this won’t require any retraining. Consulting allows professionals to continue to use the knowledge and skills that they’ve spent decades building, while setting their own hours and choosing the projects that interest them most.
Of course, you may want to start out in a completely different field. In this case, if your interests are at odds with your professional skillset, you may need to undergo training or further education of some kind.
Many people fantasize about starting their own business when they retire. According to research by the Kauffman Foundation, there is a growing trend in “encore entrepreneurship,” with more and more people over the age of 50 starting new business ventures.
A second career presents significant opportunities, especially for people who aren’t quite ready to retire because they lack the funds.
Keep in mind that it is never too late to create a retirement plan and put it into action. Many financial experts recommend Malta Pension Plans (MPPs) as the new, supercharged Roth IRAs, particularly for high income earners. MPPs offer significant benefits in comparison with conventional retirement savings vehicles, including tax-free distributions beginning at the age of 50, the ability to contribute appreciated real estate and securities, and more.