| Retirement calculations are useful in determining what | | | | the likely tax structure at retirement. An increase in |
| your golden years are likely to be. They offer the | | | | your retirement income would be taxable, unless it is |
| pre-retiree the option of manipulating variables to | | | | income from pre-taxed or non-taxable sources. |
| witness the potential effect of your current decisions. | | | | However, including this possibility in your retirement |
| Having a post-retirement job would have an impact | | | | calculation should include an analysis of the effect it |
| on your income stream. Good retirement calculators | | | | would have on taxation. This is especially important |
| determine your income stream in relation to your | | | | as a retirement job may raise the tax bracket in |
| pre-retirement income. A post-retirement job would | | | | some instances. Depending on the amount of income |
| increase your income stream. It may also affect | | | | from the job, the increased taxation may not be |
| other income sources and your tax payments. | | | | worth it. It could be that raising the tax bracket |
| Including the possibility of a job could lead to an | | | | would mean that you pay higher taxes on overall |
| overestimation of the favourability of your situation. | | | | income that may not have been taxed otherwise. |
| It may mislead you into thinking that your situation is | | | | Depending on the level of income from your job and |
| highly favourable. Making provisions for employment | | | | terms of social benefits and provisions, a job can |
| in a retirement calculation is tenuous for two major | | | | affect your state pension eligibility. Annuity income is |
| reasons: | | | | provided without reference to other income sources. |
| 1) Critical illness | | | | Some state benefits are contingent on retirement |
| As we get older, the likelihood of developing a | | | | income not exceeding a certain amount. If these |
| serious illness increases. The majority of people | | | | benefits were included in a retirement calculation, |
| survive critical illness, but are unable to do many | | | | then your position would be overstated. |
| types of work afterwards. If you include this in your | | | | Prudence is a principle of budgeting and finance that |
| retirement calculation and it does not materialise, | | | | should be applied when conducting retirement |
| there would be financial strife. | | | | calculations. It would be easy to err on the extreme |
| 2) Job marketability | | | | side of prudence and omit the possibility of income |
| Age discrimination could be a significant factor for the | | | | from a post-retirement job. Given the uncertainty |
| aged population. Employment that is | | | | associated with lengthy employment through |
| knowledge-intensive may be better-suited to retirees. | | | | retirement, it may seem justifiable. However, the folly |
| Few retirees would have been professionals or | | | | of this action would be that the effect of a job on |
| knowledge workers. They would be the ones facing | | | | taxation and other income sources would not be |
| discrimination due to their perceived diminished ability | | | | evaluated. It is best to include the post-retirement |
| to do jobs that younger people may be better suited | | | | job but look at ways to minimise the potentially |
| to. | | | | negative effects of having additional retirement |
| A comprehensive retirement calculator would consider | | | | income. |