After working your fingers to the bone for what seems like an eternity, your glorious retirement years are finally on the horizon. So, do you intend to say "so long" to your co-workers and set fire to your business suits as soon as you reach retirement age? Or do you plan to keep trucking in your current career or possibly explore some exciting post-retirement positions?

If you're like countless other seniors throughout the nation, you'll probably opt for Plan B. In recent years, experts have noticed a growing trend of seniors whistling while they work long after their retirement age has come and gone.

Working Longer
As a matter of fact, 65% of U.S. workers plan to stay on the job at least one year longer than they originally planned, based on a 2009 Sun Life Financial Inc study. Of course, many of these workers are postponing retirement after watching their portfolios take a nosedive. Whether it's out of financial necessity or simply to combat boredom, some seniors keep bringing home the bacon well into their 70s. Between 1977 and 2007, employment of workers 65 and up increased by 101%, and the number of employed people age 75 and up increased by 172%, according to the Bureau of Labor Statistics.

However, there are both positive and negative side effects to working longer. Before you decide whether to take your job and shove it or stay in the rat race for a while longer, you may want to weigh the pros and cons to working past your retirement age:

  • Pro: Working longer gives you a chance to beef up your nest egg.
    If you've lost a significant chunk of your retirement savings in the struggling investment market, you should consider working at least a little bit longer. After all, if you hope to maintain your current standard of living after retirement, you're going to need to rebuild that nest egg. (Learn more in Turn Small Savings Into A Big Nest Egg.)

    However, it may not be necessary to put off retirement for five more years. Some experts say if you've been working between 20 and 30 years, it would only take another 21 months on the job to recoup your market losses.

    Con: You may have to deal with Social Security woes.
    Regardless of how much income you're earning, you will start receiving full Social Security retirement benefits once you reach your retirement age. Your retirement age probably falls somewhere between 65 and 67, depending on the year you were born.

    Earning a great deal of income after your retirement age may result in a greater portion of your Social Security benefits being taxed. For more details about income limits or to learn your full retirement age, visit the U.S. Social Security website at

  • Pro: It gives you a chance to explore an "encore" career.
    Just because you decide to work longer doesn't mean you have to stay in the same job you've had for the past 20 years. An increasing number of Americans are taking on what's called "encore careers" after retirement. An encore career will not only provide you with some extra income - it could also give you a renewed sense of purpose.

    According to a 2008 MetLife Foundation/Civic Ventures Encore Career Survey, 6-9% of Americans aged 44 to 70 are working in encore careers - close to 8.4 million people nationwide. The remaining 80 million Americans in that age range are either fully retired or have what they consider a "meaningless" career, such as cashier or supermarket greeter.

    Based on the survey, the majority of people who are working in an encore career say they are satisfied with their jobs. Out of Americans in the 44 to 70 age range who work "meaningless" jobs, half of them say they long for an encore career.

    Con: It could hike up your taxes.
    If you choose to work after retirement, the extra income you earn could push you into a higher income tax bracket. Therefore, when you start withdrawing any IRA or 401k benefits, you may end up paying a lot more in taxes than you initially planned. (Learn more in Tax-Saving Advice For IRA Holders.)

  • Pro: It allows you to pay down your debts.
    If you leave the office as soon as you reach retirement age, you may be carrying a heavy load of debt out the door with you. Faced with fixed incomes, diminished retirement savings and sinking home values, many retired seniors are sinking further and further into debt.

    In fact, average credit card debt among low and middle income Americans age 65 and older soared to $10,235 this year, according to a study by public policy group Demos. That's up a whopping 26 percent from 2005. However, if you work longer, you'll be able to earn some extra income and pay down your debts before you fully retire.

    Con: You may face some pension problems.
    Continuing to work after retirement could also affect any pension that you're expecting to receive from your previous employer. Every company has a different policy regarding pension benefits. Do your homework and find out how earning income after retirement may affect your benefits.

There are countless advantages to working well past your "official" retirement. However, there are plenty of potential negative side effects, as well. You may want to meet with a financial professional to discuss the pros and cons of working longer. A financial advisor can also help you come up with a winning game plan and make the most of any extra income you earn in your retirement years. (For further reading on retirement, check out Five Ways To Lose Your Nest Egg, What's The Minimum I Need To Retire? and Can You Retire In Five Years?)

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