As a part of your retirement planning, have you considered a post retirement job?
Continued income from a post retirement job can have a very positive impact on your retirement finances.
Let’s do a fast calculation to see the positive impact of a post retirement job. Let’s calculate the amount of investment that you need to generate a monthly income of $1,000 per month.
To do this we must make a few assumptions. Assume the income generation rate of your investments is five percent (5%). Let’s assume that we are not going to take any principle from your investments to do this. This will leave the principle intact for use later after you have stopped working in your retirement job.
The calculation is how much principle is needed to generate $12,000 per year ($1,000 per month). The formula is principle divided by the income interest rate ($12,000/.05 = $240,000). I think you will agree that is a large amount necessary to generate $1,000 of income per month.
However, a thousand dollars per month is not too large an amount to expect to make in a post retirement job. Just look at the impact that it has on preserving your retirement investment.
A retirement calculator can help you determine the impact of a post retirement job on your retirement finances. Be cautious of the retirement calculator that you select.
When looking for a retirement calculator to help you calculate the impact of post retirement job income, don’t bother to look on investment company websites. Those calculators do not use retirement income in the calculation. Why? With post retirement income, a calculator will show that you do not need to save (and invest) as much as you do when you do not receive income from a job after retirement. The investment companies want you to invest as much as possible. The more you invest, the more they earn.
I have researched many retirement calculators on the Internet. These are three that I found that include income from a post retirement job.
AARP Retirement Calculator
EBRI Calculator
MSN Calculator
Use these calculators to determine the impact of a post retirement job on your retirement finances. I think you will be pleasantly surprised at the outcome.
In closing, a recent survey taken by Beyond.com showed 86% of Beyond.com professionals planned to work beyond retirement. Are you part of that number?
I wish you a great and productive retirement.