Life after 65: working after retirement? Read how this affects your IRA

The idea of “working after 65,” or working after retirement, is not as far-fetched as it once was. As people today stay healthier in advanced age, many don’t see the reason to balk at the idea of working after 65.

If you do plan on working after retirement, there are some IRA factors that you must consider. With an individual retirement account, the account holder gets to decide how much to save each year toward retirement and how to invest the funds within his or her account, as well as when (and how quickly) to withdraw funds once he or she reaches retirement age.

But certain decisions regarding how to manage your IRA are different if you choose to continue working after retirement. If you think you might continue working after 65 and you plan on earning an income during your retirement, here are some things to consider.


If you are working after retirement, consider converting to a Roth IRA to avoid required distributions. Self-directed IRAs permit you to invest in a wide range of investment types, regardless of whether the IRA is structured as a traditional IRA or a Roth IRA. Both types of accounts also have the same caps on annual contribution amounts. But there are some important differences between the two; contributions to Roth IRAs, for example, are never deductible against the account holder’s current year’s tax returns. Perhaps most significantly for someone who plans to continue working after retirement is that, unlike traditional IRAs, Roth IRAs are not subject to the rules on required minimum distributions (“RMDs”).


The rules on RMDs state that once the account holder reaches age 70½, he or she must begin withdrawing a certain percentage of his or her account assets each and every year. If you’re still working after retirement, you may not need those funds for your living expenses; therefore, you may prefer to leave them in your account to continue growing on a tax-deferred or tax-free basis. A Roth IRA would be a better vehicle to achieve those goals.


Use your self-directed IRA to purchase a retirement property. Regardless of whether you choose to continue working after retirement on a part-time basis or a full-time basis, you’re going to need a place to live. By using your self-directed IRA to purchase real estate, you might be able to have a home or condominium completely paid for; then you can live in that property after you distribute it to yourself from your account. As an added bonus, if your self-directed IRA is set up as a Roth IRA, this distribution would be completely tax free. Similarly, you could use your self-directed IRA to purchase a vacation property that you use whenever you take time off from work.


Working after 65? Consider taking a more aggressive investment approach. If you aren’t solely dependent on your IRA to fund your retirement living expenses, then you can afford to be more aggressive in your investment approach. This approach could give you a greater opportunity to maximize the value of your account over time.
If you have any questions about how to set up a new self-directed IRA or what types of accounts you may qualify for, contact Quest Trust Company.

Quest Trust Company helps change people’s lives and financial future through self-directed IRA investment education. Quest Trust Company helps people invest in what they know best and build their financial future on their own terms.