Do you expect to retire on the dot at 65? Sometime later? If you’re like an increasing number of American workers, the reality is likely to be a step-down process instead, according to a new study.

University of Michigan researchers found that more than 15% of workers ages 60 to 62 are still earning salaries, although at lower levels. For those 65 to 67, the number is higher than 20%.

Often, the kind of work older folks get is what researchers call “bridge” jobs, positions with lower pay but also less pressure to quit. Think of the last time you saw an obviously older man or woman in a service job, stocking a shelf or working a register. Chances are, they made better money only a few years before.

Part of the reason for continued employment clearly is need. However, experts note that changes to Social Security law, such as increased benefits for taking retirement later, have incentivized many to put off filing and to fill in those years with any reasonable income that can be found.

For the retirement investor, delaying Social Security is just part of the strategy. Any recently retired worker who has saved up money in a 401(k) or IRA plan has an opportunity to increase those assets as well — time in the market means more money.

It takes careful planning, but a near-retiree with invested savings can benefit from considering the whole picture. Here’s how to invest:

1. How long can you wait to tap your plan?

Every year you put off taking income from a retirement plan is a chance to compound your money. While it’s important to invest conservatively as you get older, that doesn’t necessarily mean holding cash or giving up on owning at least some stocks. A prudently balanced portfolio can double in 10 years relatively safely.

2. What can you put in, if anything?

If you find yourself considering a bridge job, definitely ask if you qualify for the retirement plan there. If you make just enough to get by it will be harder to save, but if it’s a little more or you can cut costs other ways you might be able to qualify for a corporate match, as well as lowering your tax bill today.

3. How does Social Security fit your income flow?

When you finally do reach your target for taking Social Security, remember that the income you derive from the government is effectively a type of annuity, a guaranteed income. If you have separate investments that you intend to hold, make sure that you don’t duplicate that investment in your IRA by owning annuities or a portfolio heavy on fixed income.

You might prefer conservative, income-producing investments in your IRA portfolio, but do consider the whole picture before going that direction simply based on your age. You could be giving up a chance at appreciation that you will need 10 years down the line.

4. What tax implications are there?

Many retirees fail to consider the tax effects of their various forms of income. If you work, of course, you will pay income taxes and payroll taxes (they continue, even after you hit your retirement age) and taxes on your Social Security income.

If you take money from an IRA that was tax-deferred you will be taxed on that, too. So, it might be worthwhile to convert to a Roth IRA to offset the tax bite that’s coming or save money in a taxable account but own tax-free bonds instead.

5. How is your health overall?

People dramatically underestimate how long they will live in retirement. If you manage to make it to 65, according to CDC data you are statistically likely to have a life expectancy of 84. Live to 75 and the number stretches out to 87.

Outliving your savings is a real risk, not least of all because of inflation. Working may be the ticket to both increased retirement savings and a happier, healthier experience of retirement, but do remember that making more now doesn’t help if you also end up spending more, too.

Send this to a friend