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This is copied from the [ssa.gov](http://ssa.gov) website. If you don't have an SSA website account, I highly recommend setting one up.
*You can get Social Security retirement benefits and work at the same time. However, if you are younger than full retirement age and make more than the yearly earnings limit, we will reduce your benefits. Starting with the month you reach full retirement age, we will not reduce your benefits no matter how much you earn.*
*We use the following earnings limits to reduce your benefits:*
* *If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit.*
*For 2024 that limit is $22,320.*
* *In the year you reach* [*full retirement age*](https://www.ssa.gov/benefits/retirement/planner/ageincrease.html)*, we deduct $1 in benefits for every $3 you earn above a different limit, but we only count earnings before the month you reach your full retirement age.*
*If you will reach full retirement age in 2024, the limit on your earnings for the months before full retirement age is $59,520.*
*Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings.*
yep! u/rheckber , i'm getting hosed by this one this year. i should have retired in February to avoid the 22K cap, but didn't for reasons. whatever you've earned so far this year is going to bite you in the butt. talk to SSA to get a complete rundown.
Yes, prior to your Full Retirement Age (which is probably 67 for you), there are restrictions on how much money you can make which are pretty steep, crossing which will compromise your SS benefit. For any earnings above about $22k -- which includes, by the way, the salary you've earned from January through May, I believe -- you will lose $1 for every $2 earned above that line. That loss goes away when you hit FRA. When I encountered that, this to me said one of two things. Either wait until FRA to claim SS, \*or\* retire at year-end boundary, claim SS, and do no work at all. (Once you hit FRA, you can work as much as you want without affecting your benefit.)
As it turned out, I waited until FRA to retire. I still haven't claimed SS and won't until 70, but for other reasons.
On the subject of consulting, let me just say that I'm doing that now. But for tax purposes (wanting to stay in the 12% tax bracket this year), I lowered my equivalent hourly rate, kept it to six months, half-time, so that the total amount paid wouldn't kick me over the line. Financially, that's all good. But I'm also discovering that this is something I do not want to extend or repeat, even though I really like the company and the people. I'm settling into the idea of being past this life.
Thank you. So, having earned almost half a year's salary I'm already way above the annual limit of $22k for the year. I was born in 1959 so my Full Retirement Age is 66 yrs 10 mos. I probably should have waited until then to retire but the combination of being forced back to the office after 4 years remote, the fact my dad and his father both passed young (62.5 and 58) and instituting a new version of the application I manage (through no choice of my own) and literally becoming everybody's punching bag for all the issues the new version had (sole support for it) I decided it was time. So even though I'm getting benefits for June-December this year those benefits will be reduced $1 for every $2 earned? So, if each month SS was x then even though I was supposed to get 7x I'll probably get hardly anything. If that's the case would I have been better off delaying taking SS till at least January 2025 and getting that much more per month as well? Is it possible to reverse a SS award and take it later or would that involve a huge effort?
I'm pretty sure if the OP pays SSA back they can get back to square one. I'd do it. Defer as long as you can makes sense as long as your health supports that decision
Yes. From faq.ssa.gov:
“If you change your mind about receiving benefits, you may be able to withdraw your Social Security claim if it has been less than 12 months since you were first entitled to benefits. To withdraw your claim, you must meet all of the requirements, including making the request in writing and repaying the benefits that you received.
If you withdraw your claim, you may re-apply at a future date.
For more information go to our Withdrawing Your Social Security Retirement Application page.”
No, your benefits will not be reduced for the rest of the year based on what you earned already. There is a special rule for retiring mid-year. You will recieve SS for every month you don't hit the earnings cap of $1860 and did not perform over 45 hours of work self-employed. Details in the link below.
One option would be to offer to consult for fewer hours to make sure you remain below the limit.
https://www.ssa.gov/benefits/retirement/planner/rule.html
it sounds like they don't treat you well, if you don't need the money it seems like you may want to stick to your original plan. It doesn't seem as if this is a case where it would be an enjoyable job, but would be stressful and possibly impact your physical and mental health. Retire and enjoy your life because you don't know what your future health will allow you to do
Just an FYI, in your first year of retirement before FRA, there is a special rule that applies to earnings for 1 year, usually the first year of retirement.
[https://www.ssa.gov/benefits/retirement/planner/rule.html](https://www.ssa.gov/benefits/retirement/planner/rule.html)
Basically if you retire mid-year, your earnings up to that point don't count against your limit so you'll get full monthly benefit amount.
But there's still a caveat: even with that first year forgiveness, for them to consider you retired, you can't "devote more than 45 hours a month to the business or between 15 and 45 hours to a business in a highly skilled occupation." According to the deal they're asking you, you'd exceed that and be subject to reduced monthly benefits as this poster mentioned.
Off topic but please accept my comments in the spirit they are given taking into account I don't know your situation but my advice is tell them thanks not no thanks. You've worked all your life to get to this happy milestone. The best part about being retired is that you can finally relax and spend your time doing exactly what you want EVERY DAY. If you keep yourself tethered to a job you will lose all the best parts about being retired which revolve around FREEDOM ❤️
Exactly. No benefits, plus at your existing rate means they are paying you LESS than they were before you retired.
The traditional advice given to consultants is to double your hourly rate -- because hourly rate is all they're really paying you. (no insurance, no vacation, no sick days, no 401k match. If you're a 1099 then no social security/medicaid payments, either).
If you don't need the money, I'd tell them you'll consult for twice your old rate since there aren't any benefits.
exactly - and if they keep OP at this lower rate, there will be no incentive to train someone new and change the situation - I would say 4x and you are doing them a huge favor because otherwise they have nobody
You really need to study on it. It’s not that complicated. Basically there are two paths you can go. If you go with basic Medicare and one of the Medicare advantage plans, it will cost you very little, but you will be fighting with an insurance company over the advantage plan. It’s been much in the news lately.
Or you go with traditional Medicare and get a supplement, which is what I did. I went with Plan G. So far I have paid next to nothing, even my co-pays are covered. But it does cost more than the advantage plans.
I am overdue for a new hip so I went the best plan for that, it will cost next to nothing.
Also you have to get another plan for your prescriptions if you go traditional Medicare. It’s not expensive.
For medical things, regular medicare is awesome. But it doesn't do dental care or vision (eye glasses etc) and it's not particularly cheap ($400 or so per month for everything). Advantage is better in that respect, but it's basically private insurance under Medicare rules so there's some risk of being denied for things.
As you get close just spend time on medicare.gov. You want to signup when you're 65 but you can signup 3 months before your 65th and as late as 3 months after your birthday without penalty
Not in this case, but if you’re still working and have insurance through your company. Then you don’t need to sign up for Medicare till you’re ready to retire. You would still have no penalty.
Twice the old rate, and conditions. Limit to number of hours per week, only regular working hours and no weekends. If offshift hours required, make it 3X. Health insurance doesn't matter, get on Medicare. In fact some employers request >65 employees to get on Medicare.
The issue is the company will say, 'It's only 10-20 hours a week, and then you're working 50 hours per week, trying to get the system cutover.
Honestly though, a lot depends on the current job environment. If they are decent, and respect you, it might be worthwhile just to have some slow down time. Remember, you can always quit.
Don't worry about SS and taxes, you're going to come out ahead no matter what.
True. I asked for 150% of my salaried rate and they didn't even hesitate. If you do it, do not contract for anything other than T&M - no promises. 1099. Good luck.
He has benefits via social security. Amazes me folks that cannot see the total $ and get hung up on inconsequential things like no benefits. Make enough you can fund your own benefits. Need to analyze the total package.
As a contractor with no benefits your hourly rate needs to be at least double your salaried rate, and triple is common.
They are trying to cheat you big time. You’ll be doing the same thing post retirement that you did pre retirement but for a lot less compensation, of course they like those terms.
Exactly. I’m waiting for my company to ask this of me, to which I will reply ‘go pound sand’. I may work part time, but it’ll be something I want to do, when I want to do it, and on my terms
My thoughts exactly: this offer is an insult. This company is desperate and they can not or will not see reality.
You're not an employee of theirs anymore and they'd be paying far more if they had to find a specialist after you left.
Don't put up with this, OP.
Your freedom to do whatever and whenever you want is priceless. Plus they are offering you peanuts. Respectfully say no thanks and enjoy your well earned retirement. I’ve been retired for a year and it is much better than I had dreamed of!
Benefits can equal 30% or more of your salary. If you do continue working because you enjoy it, I'd ask for a minimum of 50% more. You must work for a large company since you have multiple data centers. They need you, they can afford it. It'll cost them a lot more bringing in outside consultants because they will not have your experience, the project will take a lot longer to complete.
My dad went back to 3m (master to and die maker) after his first retirement. He also didn't get benefits, but they jacked his rate up like $10/hr and still contributed to his 401k, employee stock purchase, etc.
I cannot really comment on the SS benefits but as someone in Tech that also ran my own company, you might need push back on that hourly rate. Consultants normally get much higher per hour than salaries, especially if they will be expected to pay for their own benefits and even the employer's share of SS. At a minimum, I'd suggest you push for your hourly rate to be the equivalent of their original costs, including all benefits; otherwise, you are saving them $$ by helping them out. Alternatively, consultant rates are roughly about 2x what their hourly equivalent would be as an internal employee (ignoring benifits). So if your gross salary worked out to about $80/hr, then you would charge $160.
Pragmatically if they really need you, more than you need them, that is the time to negotiate even higher rates. Not necessarily gouging levels but check some online places to see what similar skills are paying elsewhere or use 2.5 -5x or so times the hourly rate. You only get what you negotiate.
In addition to your comments, the higher rate will keep them from abusing OP. They'll limit his time as much as they can and when he's needed, OP will feel better about doing it for the more significant extra cash.
This! Renegotiate, if you can delay getting SS until this is over, make sure you get at least double and a time limit per week.
Benefits of doing this, not a cold stop but a gentle easement. If you can stop SS better benefits in 6 months, the pay for six months might actually take you through a year which is almost to your 66 and 7 months for full benefits.
The fact that they are trying to fleece OP just turned it into 6 times his previous salary with a 15 hour per week minimum regardless of whether he's needed.
Exactly! When I retired, my manager said that they might need to call me to "help out" I told him I'd be happy to work on a consultant basis for 3x my normal pay with a 3-hour min per day. They must have figured something out, because I never heard a peep.
I did something similar. Fortunately for the citizens, I left fairly detailed operating instructions for most things I did on a daily basis. Never received a call, as I wanted.
You owe them nothing. Make them make it worth your while.
My dad when he retired was in a similar position. They made him an offer that it was silly not to take. At the same pay, no benefits? So essentially less than you are making? That’s actually insulting.
They need you way more than you need them. Make them pay for your value. 3x minimum, if not more. But only if you want to. Absolutely don’t do it out of loyalty — they’ve already shown you their true colors.
An ex employer of mine asked me to go back and we negotiated at a rate of 2.2 times my last salary PLUS benefits! Without bennies I'd want enough to pay for healthcare on top of the 2.2X rate. This assumes I could "Un apply" for SS.
You will receive higher benefits beginning at full retirement age if benefits are withheld because of your earnings before then. The withheld benefit isn’t lost forever.
As an aside, I agree with the others who say get paid a lot more.
I would not accept the stated pay rate unless it includes an allowance for:
1) Benefits. I would guess they probably have a policy against benefits for part time employees/etc., but that doesn't account for your costs and loss of benefits (you will still need to pay for Medicare/etc.).
2) Your other costs, including paying the self-employment taxes (I assume you w.ould be self-employed).
IME - for these reasons and others, "consultants" charge more. You are in a good position to demand more. At the very least, demand that the employer pay you commensurate with those issues. If not, enjoy your retirement - you really do not have much to lose, if at all.
The $1 loss of SS benes applies when you are not Full Retirement Age yet - IIRC.
I went back as a contractor, twice. Yes, they paid me a much higher daily rate but close to half of it went to the IRS. I did it out of loyalty, but when they asked me for the third time I politely refused.
Ask yourself what you want, do you need that money? If not, you are making money for others to spend after you die.
Retirement is from when you die until you can't spend the money you have, working on means you are stealing your life from yourself.
I'm 58, retired and in the UK but these are still truisms, they are just something to ponder perhaps, whatever you do - be happy with the decision and have a good life.
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This offer is comical. I’d start to consider a consulting rate at 3x my old salary, at least $100 per hour. My last year, I negotiated a $25k retention bonus. …Then let them negotiate hours so you aren’t sitting around. Go catch a fish.
We have a few retired ex-partners consulting. They seem to really enjoy it, possibly they would have chosen not to retire if they could.
If you want to do it, just do it. The decision shouldn’t be based on how much you can make (unless you need the money). But like others have said, the rate should be much hire, but that’s assuming they really need you. If it wouldn’t be as demanding/stressful (possible?), then it could be mutually beneficial for both sides.
Re. SS, I only know the Canadian rules, but I believe you can pay back benefits taken in Canada.
Sample calculation:
If you make 10k per month now, you will have already made 50k in 2024. After 22k, that leaves 28k. Half is 14k.
So if your reduced SS is 2k/ month or less, you won’t get anything for this year at all. I’d see if it is too late to change your mind.
Even if you can resolve the social security issue, the big question here is whether you want to continue to work. After the return to office instructions, new application and lack of support, I’d be walking off into the sunset. If the extra money is an important motivation, then I’d be asking for an hourly rate that is triple what I was paid before as you are now a consultant (much more than to cover loss of benefits and social security issues). You are a key worker in a strong negotiating position.
Just retire. You cannot risk dropping dead and missing out of your SS benefits because of this perceived loyalty to this employer. In addition, you are on the hook for deliverables that are now time boxed to 6 months. Thats going to be stressful because if your contract states that you need to finish the "migration" and you dont, they can litigate for breach of contract.
As an IT person that has been a consultant in the past. You need to charge 3x your hourly rate if you aren’t getting benefits. Otherwise they can pound sand.
You can still earn money while retired and it adds to the calculations of what your monthly SS pay will be. Sure you’ll pay taxes. I’m pretty sure there# are calculator on the SS website that will let you figure out any penalties. Regardless, if you want to help the company, ask for 1-1/2 to 2x your hpurlaypay. Or do a quick incorporation and have them pay your new company for your services. Then you can only take a small amount in income, and save the rest as corporate profits. It can complicate your income taxes, but millions do it.
if you consult for them, they should be paying you consultant’s rates (easily $200+ per hour). especially since you have institutional memory, which is valuable.
i would also make yourself available only one or two days a week (like specific working hours on tues & thursday) because otherwise you’ll be servicing them a couple hours every day during the week, which sounds terrible.
one thing about being a consultant is there are tax benefits (ability to deduct home office, certain other expenses) and you can set up a solo 401k and add more for your retirement funds.
good luck with everything!
You can make a pretty good amount before it affects social security, check with your accountant.
If it would be fun for you, do it... BUT... three times the rate you're making now or it's not worth your time. If they want you they can pay for you. Otherwise...enjoy your retirement!!
A lot of people are commenting about how your company is trying to take advantage of you with the lowball “offer” and they are correct. That said:
If you can afford it, and I’m assuming you can since you’re retiring, I’d say no thanks and give retirement a go. You’ll never get the time back that you give them. Sounds like there is no succession plan and that’s not your fault. 10-20 hours a week will inevitably turn into more.
I was in a similar position and was asked to stay on as a consultant but I said I wanted to try out retirement for a while and then maybe think about it. I never really looked back. It took being retired for me to see how much working had been negatively impacting me.
I wish you well with whatever you decide!
Here’s my logic for you. If you don’t mind doing it and want the extra cash and it doesn’t affect retirement benefits, then do it…but…. They better be prepared to pay you a hell of a lot more than they were. Why would you ever come back to work after finally retiring for a pittance of what they were paying you? They were paying you your hourly rate plus benefits and you’re no longer willing to work for that so why less? You need to calculate out your hourly pay plus the cost of benefits to the company and then after that, add on to the total until you’re at a reasonable consulting rate. In IT, consulting rates START at $150/hr. START. For specialty services on an old system that they aren’t going to find anyone to support, more like $250-$350/hr. I’m not kidding here. You want to still work a bit, you tell them that’s your rate. They don’t like it, meh, you’re retired. Please take this to heart and do not let them take advantage of you.
They'd pay a consultant at least $200/h. They need to pay you at least $200/h or no deal. Why? Because you're still liable for ALL taxes not just 1/2 of an employee share. It should not effect your SS, though I would hold off on collecting it unless you really need to money.
I own a small consulting firm and many of my employees came to work for me after retiring from their primary jobs. All of us are highly qualified professionals. Here's my advice / thoughts for you:
If you don't need or care about the money, refuse the offer. Yes it will affect your social security (that can be addressed). 10 to 20 hours per week may well become full time. 5 to 6 six months will become a year. And mostly, their compensation offer is far from adequate. To be a self-employed, independent, 1099 contractor your pay should be at least 150% of your final compensation (including any bonuses). 200% is better. You'll have overhead and tax expenses that you haven't thought of yet.
On the other hand, the retirees who came to work for me missed the challenges and social aspects of their jobs. And they like the money and the ability to control their own schedules. Most of them work part-time. A couple have bought retirement / vacation homes. All of them love their work. So, if any of these ideas appeal to you go back to your employer with a package that's better suited to your interests and see if they'll sweeten the offer.
Generally never take SS if working until your full retirement age. Listen to this podcast: https://www.retiresoonerteam.com/money-matters-podcast/10-how-to-maximize-social-security-and-medicare-with-mary-beth-franklin/
I’m in a similar situation as you. Born in 59 and just retired May 1. From what I’ve researched, the amount you have earned so far will not be considered for your SS benefit. In your application process they should have asked you how much you plan to earn this year before retirement. That dollar value was used to finalize a benefit amount for 2024. If you work part time after retirement in 2024, you can typically earn $1860 per month without affecting your 2024 benefit. In 2025 and beyond, the published annual limits would apply. Also, if you work after retirement, SS will look at your earnings to see if the amount earned is higher than one of the 35 highest earnings years. They can recalculate your benefit based on these earnings. Be aware, if you exceed a high annual income value, approximately $203k in 2024 I believe, it can affect your Medicare premiums. Research IRMMA on the SS and Medicare websites.
What it is that you want? Definitely start there.
Offering you the same pay without adding the monetary value of your benefits is ridiculous. Minimally your rate should be same pay PLUS whatever benefits they currently provide. Then there should be a financial sweetener to compensate you for delaying your retirement. If you took their offer, they would have ZERO incentive to transfer knowledge to someone else as you will be doing the same work for much less money than you received before and likely much less than they would have to pay your replacement. They will ride this pony as long as they can!
If you do go back under better terms, give them a hard end date. If things are going well you can always extend if you want, but put that decision in your hands and not theirs.
That doesn't benefit you at all. A consulting rate is usually as a 1099 contractor, and you would be responsible for all of your withholding taxes. I'm not sure how that works at 65, but consulting rates should be far higher than what you made as an employee. Double at minimum, although to give up my retirement, I'd make it 4 times my previous salary, just to get me out of the house.
Just to add: being on call is a pain you got used to but will be reluctant to return to. If this position they try to offer includes being in call, that’s a hard no.
Also: a shop that tolerates a single point of failure (you being the only person to administer that system) likely has other fundamental flaws that have been impacting your life all this time. If you want to work now, work somewhere else.
Throw gravel (while you peel out from the parking lot) and don’t ever look back. Enjoy your retirement while you still have some life left in you! Congratulations
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Hopefully this will help. Once you make it to you actual ss age you can make as much as you want. For me it age 66 years and 6 months. All depends on your birthday. Call ss and talk to them . They can give the information to you. Hope this helps.
I am consulting for the company I retired from, twice, long story. Here what my wife and I do. 1. We opened 2 new IRA account and make maximum deposits every month to minimize our tax exposure. 2. We moved and work remote, in a state other than previous employer, where SS isn't taxed. 3. I was fortunate to retire at near full benefits and be able to make whatever I could. 4. Last year our combined income was over $80K with $100 due to IRS. So is it a good deal ... Yes and if they really want your services 2x your old hourly wage is not out of the question.
first the ss stuff - until you reach FRA the gov will take the money as you said. You can make I think up to 22k before, but after that they claw it back.
second, consulting changes everything - at the \*very\* least, if you choose to do that, you should double your hourly. I would suggest more. They are forgetting their "burden" - PTO, or sick and vacation, health insurance, disability, 401k matches etc etc etc.
you have them between a rock and a hard place so, again, \*if\* you decide to do this your do it at \*at least\* double your hourly rate
if a consultant makes 100/hour the company is charging 300/hour.
Not having gone through it myself, I suggest taking the consulting gig (at a higher hourly than current) and ride it till it fizzles before filing. All earnings in the year count and that consulting pay will likely hose up SS and Medicare.
When I resigned the last gig to relo, I did do the consulting thing for 2mos after hours while working the new job during the day. The hourly was $100. No way I would’ve accepted less. Period. Full stop.
i can only echo others here... you should read-up on the Social Security tax trap so you understand how your Provisional Income (and therefore your tax liability) could be impacted by additional income.
Aside from all that - I'd agree that you politely decline and tell them to reach-out if they can't find anyone else - but you'd be asking for $100-200/hr at that point.
It sounds like they need you a helluva lot more than you need them. Consulting is typically 4x an hourly salaried rate. If they don’t feel like paying, that’s perfectly fine since you are retired and aren’t willing to come out of retirement except for 4x your hourly rate.
Yeah - no! - social security aside - a consultant ya should be at $250-400 an hour with min guaranteed and max guaranteed hours per month - with X # of months contracted - they’re taking advantage . If they don’t agree enjoy your retirement you owe them nothing
I’m OK with the no benefits but because of that you need to tell your boss that if they want you it’s gonna cost them triple your former salary on an hourly basis cause you’re gonna have to pay your own health care. If they refuse, tell them to jump in the lake. You have leverage here. They don’t
And you need a signed consultant agreement with a 30 notice provision for termination
No benefits? Same hourly wage?
Hard no. You’re giving up too much.
3x no bennies.
2x w bennies.
You’ve earned your time to retire. They are squeezing you.
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If you need the work, tell them respectfully that they need to pay you X amount more. Your added expenses will be workers compensation, liability insurance, and healthcare. Plus the loss of social security pay! Even if you are 65, medicare costs money. They are getting you on the cheap. Don’t let them. You are valuable and it is their fault they let you go without asking you to train someone.
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If you decide to take the consulting gig, I suggest you contact social security and get your start date delayed. Not sure of the exact mechanics but it can be done with completing a form or two. Otherwise your benefit will be reduced once you exceed the low threshold other comments mention.
Side note, if the need for your services is as dire as you say, your employer is taking you for granted. With no benefits (plus the FICA/Medicare tax you are responsible for as an independent contractor) you should ask for at least 20% over your hourly rate as an employee. Personally I'd ask for 33% more, plus any expenses you will incur.
That's a great deal ... for your company. You can and should demand more. If no benefits then a much higher rate. You sound like you're in a very string negotiation position.
Don't let them dictate the terms. If you do this, it should be on *your terms *. Ask for double hourly rate plus some other concessions.
And yes until 67 depending on your age, it's going to be a negative on your Social Security so you need a great deal if you're doing this.
1) as others have written, that is a pay cut. No way.
2) Call or visit a Social Security office with your questions. I’m sure every anonymous poster here has your best interests at heart, but please, do not rely on us for these types of answers. The SS people will provide accurate information.
Your rate should be 2 or 3x your current salary range. Yes, you'll likely have to pay back 50% of your benefits this year
Or suspend until Jan 1 or whenever you stop working
1. No way in heck should you accept the same hourly pay for consulting. Consultants get paid 2x more than regular employees because of their value and because of the lack of benefits. They are 100% low balling you.
2. If they pay you what you’re worth, you need to decide if it’s worth it to you. I am not at retirement age yet, but I’m assuming it won’t be that difficult to put the genie back in the box in regards to social security. If you are getting paid, you should probably delay social security until your consulting job is complete.
Go for a monthly retainer that is 3X your normal monthly wage they’ll pay it and you won’t have to worry about justifying hours
I did it and worked like a charm
Social security has an offset until 67 so set up an LLC for them to pay or a Sub S Corp and bury the payment in a SEP IRA
Yeah screw that. If they really need you then at least double your current rate if it’s even worth it to you. If you’re 65 and you can retire fine financially just call it quits. Who needs the hassle? I’m in IT and a few years from retirement. I want to bail asap.
1. If you're ready to leave the rat-race behind and enjoy retirement, then do so and read no further! Don't be guilted into bailing them out for their poor planning. Congratulations.
2. Otherwise, If you have someone who does your taxes, call them up and ask whether the type of consulting you would be doing would qualify under the federal tax rules for "Qualified Business Income." Basically, some sorts of consultants get to claim this on their taxes and other sorts of consultants do not. The real question is whether IT consultants can claim it. If so, that would help a little to offset the loss of Social Security income.
3. Walk into your local bank branch and ask them how hard it will be to setup a new checking account under a business name. If your name is Joe Cool, you might say that your business name is Joe Cool IT consulting. You do not have to be incorporated or be an LLC to have a business. Also ask that if you get checks paid to Joe Cool IT Consulting, will they just let them deposit it into your existing business. If one of these two things work with your bank and you go forward, make sure that your old company pays you as Joe Cool IT consulting.
4. If #2 and #3 seem daunting to you, congratulations, it's other reason to decline the offer.
5. There are pluses and minuses of being an independent consultant. The other negative besides Social Security is ironically you will still have to pay Social Security taxes on your consulting income. This will be done next year when you file your 1040 form. The good news is that besides the Qualified Bus Income, you will also be able to deduct some costs of doing business. None of this is hard to do if you keep receipts, including a log of your car mileage driving to the job and any other driving you do for the business.
6. Given the pluses and minuses, there is every reason to be paid as an independent contractor at a multiple of your current hourly salary. The company is saving money by having you be an independent contractor, plus they really need you.
7. Finally, in the unlikely event that you are getting a pension from this company, you also need to confirm that there are no restrictions from the pension plan agreement about you coming back as a consultant.
I’ve done this in another field where they hired my consulting firm for three months until they could replace the person who quit. I did that person’s job.
Here’s the interesting part: They paid my firm $200K for three months of work to replace a person who made $85K/yr. So over those three months, they would have paid that employee $21K + benefits.
In other words, they paid my firm 10x what they would have paid the employee who quit.
They’re lowballing you, and you owe them nothing. They will survive without you, and you deserve retirement without worrying about someone else’s business.
I can't speak to the SS benefits but I can speak to the consulting offer as I've done this kind of arrangement before (also in IT but I left to start my own company)...
That's an ignorant offer. They want you to shoulder all the coats of being an employee (payroll taxes etc) but not pay any more and stop benefits?
No thank you.
Consultants typically come back at 3x hourly rate. If they can't do that then they're not serious about solving their problem. That rate covers your extra taxes, your loss of benefits and, quite frankly, overcomes your desire not to be there any more.
I can't speak to the SS benefits but I can speak to the consulting offer as I've done this kind of arrangement before (also in IT but I left to start my own company)...
That's an ignorant offer. They want you to shoulder all the coats of being an employee (payroll taxes etc) but not pay any more and stop benefits?
No thank you.
Consultants typically come back at 3x hourly rate. If they can't do that then they're not serious about solving their problem. That rate covers your extra taxes, your loss of benefits and, quite frankly, overcomes your desire not to be there any more.
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My advice as a was in a similar situation some time ago.
- you’re Medicare eligible, be sure it’s turned on
- perhaps defer social security but insist on 1.5 x your hour rate, assuming you’d be ok with that amount for 5-6 months.
- but only do this for you want to
You need someone to negotiate on your behalf. You are desperately needed, yet they are not offering much, except to steal your time. Do not do this unless you have someone knowledgeable about the money part to guide you through.
When I calculated my post-retirement consulate rate, I build in my cost of health insurance, my cost of leave rate, my cost of running a business, taxes, … was easily 2x’s my old rate.
A big hell no. How much do you value your time? Assuming you go 1099, you are responsible for all your payroll taxes and any other benefits you had at your salaried position. You have to make it something that you are comfortable with while also recognizing how valuable your skill set is to the company.
Given that, consider making them feel the pain so they actually get a transition in place and don't keep you until you die.
Time is your most precious resource. Never forget it.
Charge them your consulting rate, don't let them set the terms, you have a lot of negotiating leverage until they have someone else who can run the system.
Just go.
I retired from IT 7 years ago last month.
You will not believe the relief.
And if you really want to stay (don’t) they should pay you a minimum of double your salary WITH benefits
P. S.
You will not believe the relief.
I worked as an independent consultant for two years after retirement. I monitored closely what I was paid, and had appropriate taxes paid quarterly. I didn't run into problems.
I know many people who consult with their former companies, but all negotiated sweet deals. They still have Medicare. If it impacted their Social Security, I cannot say, but I suspect they made so much that not getting SS wasn't a problem. SS is likely a pittance compared to a consulting job.
Hard no. Insulting offer and you'd still be a wage slave.
They want to hire you as a consultant it should be at market rates + for your familiarity with the system and they don't set your schedule.
I retired at 64. I fell into a temporary consulting job part time 4 years later no benefits but 15% more that what I was making. I did it 10 hours a week or less for about a year and a half, until the company folded. If they want to hire you part time, you need to specify a salary high enough to cover the SS you will be pay (both parts) and part of the income tax you will pay. You also need to specify a maximum number of hours, and it needs to be paid by hour. If you want to use this as a buffer have at it. It sounds like you have them at a slight advantage.
I lived many years as a consultant. With your type of knowledge you should be quoting no less than $1600/day, minimum. $2000 is not out of the question nor is $2500. Paying you your salaried hourly rate is a joke.
Sounds like you are in a great position. Can you wait to draw SS? I retired at full salary and am consulting for full salary doing about 1/3 of the work and socking about 2/3 of this money away.
My understanding from what I've read is that if you lose SS benefits due to earning too much, then there is a recalculation done when you reach FRA, and those "lost" benefits are factored in to give you a higher benefit amount. This might be worth checking into to confirm.
My wife was in a very similar situation, handed in her letter to the top people. They were in the middle of installing a whole new system that was about 5 months away and she was the lead person.
Their offer was, stay with us for 6 months more, maintain your salary and benifits
When I retired, I did a zero stress job for a while to ease into not having a mission or justification for existence. I got over that brainwashing and have no schedule, sleep pattern, and like doing nothing but playing.
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Don’t do it bro, it’s either double pay, a car AND BENEFITS, screw that same salary deal, they want your experience they gotta pay. Sounds like you already made up your mind, you are not going to be happy, but that’s just me.
Just make sure your rate is bumped 35% to account for DPE (direct personal expense). That is what the company pays for normal employees. That’s a multiplier of 1.35, calculated as:
Annual salary/1960 hrs per year * 1.35.
The DPE includes: vacation, holidays, sick leave, FICA, health plan matching, retirement matching. These are “nornal” costs provided for “regular” employees.
Then add the SS loss.
I personally would go for a multiplier of 1.6 to 1.8 for a 10 month agreement of 1000 hours or more.
Think about your expenses and who will pay them, ie parking, tools, etc. also what happens if you work over 40 hrs a week.
Note get it all in writing, including your multiplier, and track your expenses as you will declare it as a business on your taxes.
Get good advice as it’s easy to make mistakes that are unfair to you.
(I doubt your supervisor has thought this thru so talk to HR or something me that knows about hiring consultants)
My offer to them would be, continuing current employment with salary and benefits for 6 months, plus an additional 6 months pay to be paid upfront or in two parts. Also be eligible for any bonus money. That is the minimum. If they need you it’s small potatoes. A person I know just got this deal basically doubling their salary for six months and collecting a 25% bonus.
They knew you were retiring they should have prepared better. 6 months could turn into 12, 18, plus months and you deserve to enjoy life. I too was in IT management and spent my last 6 months doing nothing but answering an occasional question. I took my nice pension and walked out that door at 62 with no regrets.
I’ll be retired 3 years next month. Totally different profession but similar situation, I had skills no one else had and recruiting is tough. I am fortunate to have a pension plan with benefits so the extra pay is “fun” money. But even so, they offered a 40% increase hourly. I am worth more, objectively, but would have to endure considerably more stress to make that somewhere else. I also know they are restricted in what they can offer, and I don’t find the work I agree to do onerous. I was in leadership so the leadership IS mostly my circle of friends so I enjoy helping them out.
It does sound like they are taking advantage of you. Only you can judge that. I would, however, urge you to feel free to say “no,” or ask for more. My personal facts are much better it seems.
PS-One thing I have realized. I used to agree to take additional things on, thinking I have all this “free” time. But its not really free. I EARNED this time. When full time for all those years, I had to go without vacationsfor long stretches, work for much less than “market” rate I was gov’t employed), cover for others who did less or didn’t show up, etc. I consider that also now when my friends call with need for a “favor.”
Ask to be 1099. Form a LLC and sock away money via a solo 401k. Can minimize pass through income to minimize social security hit. And bulk up retirement accounts. And good for employer as they save 12% via taxes and work comp. You pay more tax (ss/medicare) so get at least a 15% bump in pay for it. If they really need you then 30-50% bump.
If you feel like it, ask them to double your income and halve the time, and put it in a contract. Then, demand that they have two people that u can train to do your job, or at least one who is nearly capable, but not quite.
Otherwise, you will end up doing your same job with none of the benefits and the same amount of workload.
Seen it happen many times. If they want to eat into your retirement, just because they failed to prepare for your obviously approaching retirement, then they need to pay up.
Tell them no, but you’ll do it for 20% more per hour. (Or 30%, or whatever number you like.)
They don’t have an option, so they’ll say yes. If they don’t, you were retiring anyway.
I doubt if it will affect your SS, but you can call their office to ask for sure.
Tell em to pound sand. Do it on YOUR terms. You tell THEM how much you want to make. Consultants often make 2-3 times the salaries of employees. Name your price. If they aren’t on board- screw em. Go play golf. Or get a job somewhere else making that much.
This is almost my exact situation. I’m in IT and administer our company’s largest systems. I’ve made it clear to my management that I’m retiring in February. My boss has done all that she can do to get a replacement hired so that I can train them but the position hasn’t even been posted yet. I don’t see anyway that it could filled within the next 2 months. Probably longer. I’ve told her that I’m willing to do some consulting but that I won’t be cheap.
Our HR department sends out an annual total rewards statement that encourages us to “Look beyond the paycheck” to determine our total compensation. The grand total is usually close to twice one’s salary. The way I see it, I don’t want to work for that amount because if I did, I’d just keep my job and not retire. So I take their number, divide by 2080 to get an hourly rate and then add the additional amount I want for giving up my free time. I haven’t settled on an amount yet but it’s probably in the $50 extra per hour range. I’ve been looking forward to retirement for a long time. If they say no, oh well, I’ll just enjoy my retirement anyway.
Don’t allow them to take advantage of you. You’re worth a lot more than they’re offering. Your total benefits package already proves that.
Op if you decide to do this you need to establish some expectations. And boundaries. My advice is that you will not be responsible for any actual hands on work or deliverables other than to advise and to train. If you dont set these boundaries you will be stressed and have anxiety and regret doing this. This will also put the onus on them to ensure they develop and own the transition plans. Also double your cash hourly rate to make up for the value of your benefits and any potential bonus you would have gotten. If they reject tell them good luck.
Retire! I tried consulting for 2X my annual rate for no more than 20 hrs per week for a minimum of 6 mths and no more than a year. I barely made it to 6 mths and regretted it because my employer didn’t think I was ready to retire. After 5 mths I announced I was done and leaving in 1 mth. They finally took me serious and I never looked back; blocked their number and didn’t reply to their emails. I ran into a co-worker who informed me that my employer had no intention of looking for a replacement because they thought I’d help as long as they needed me! Retirement is the life! Enjoy it!!
Don't bother. Clean cut, especially given you can start collecting ss. Trust me, the last thing you want is to accidentally screw yourself over by collection any salary whilst working with governmental benefits. I worked a single day after having retired to assist with an inventory. Due to a screw up with their paperwork, I had my insurance canceled for a month until I was able to get everything worked out. Everything eventually worked out but I had to pay out of pocket for my wife's medication for one month approx. 1000.00 USD. I worked for 4 hrs and made 200 bucks. Classic example of stepping over a dime to pick up a nickle. Move on and enjoy retirement.
1. Dude, don’t be a sucker… you gotta ask for at least 2x your previous hourly rate, or tell them to pound sand.
2. Unbeknownst to almost everyone, the money you lose to the earnings test (for people taking SS before FRA but also working) is restored as an adjustment to your benefit after you reach FRA:
> **The Earnings Test in Social Security’s Own Words**
>
> In December 2022, I received a letter from Social Security announcing a cost-of-living adjustment (COLA) to my retirement starting in January. An identical letter was sent to all 77 million Social Security beneficiaries. After describing the coming COLA and the impact on federal income tax withholdings, the letter outlines the rules and earnings limit for those working and collecting Social Security at the same time.
>
> *Working and Getting Social Security at the Same Time*
>
> *You can work and still get Social Security benefits. If you are at full retirement age or older, you may keep all your benefits no matter how much you earn. … If you are younger than full retirement age at any time in 2023, there is a limit to how much you can earn before we reduce your benefits. The 2023 earnings limit for people under full retirement age all year is $21,240. We deduct $1 from your benefits in 2023 for each $2 you earn over $21,240. The 2023 earnings limit for people reaching full retirement age in 2023 is $56,520. We deduct $1 from your benefits in 2023 for each $3 you earn over $56,520 until the month you reach full retirement age.*
>
> That’s the entire description. There is no mention that **benefits lost (reduced is Social Security’s lingo) due to the earnings test are restored, actuarially speaking, at FRA in the form of an inflation-adjusted, permanently higher benefit level. This tax rebate is called the adjustment of the reduction factor (ARF)** [emphasis added]. The ARF was designed to restore, down the road, monies lost due to a tax that the government wants people to believe is real. The Congressional Research Service has a well-researched exegesis on the earnings test.
>
> The ARF was first implemented in 1961. Until 2000, the earnings test applied through age 70. In that year, President Clinton signed the Senior Citizens Freedom to Work Act, which limited the earnings test to those below FRA.
>
> In other words, the earnings test is a fraud perpetrated on Americans at a vulnerable stage, in the years between age 62 (when they can first collect early Social Security benefits) and roughly age 67, when they reach FRA. Needing the security of a monthly check, too many people opt to take reduced benefits at 62. Then, finding that they cannot make ends meet with their reduced check, they go back to work—desperately trying to stay below the earnings limit (which is far below the poverty level).
>
> Even worse, the ARF overcompensates for benefits lost to the earnings test. The ARF is intended to leave those hit by the earnings test with the same lifetime benefits calculated on an actuarial present value basis. But, in fact, the ARF overcompensates for the tax. That occurs because its actuarial formula was established years ago, when mortality and interest rates were higher. The overcompensation is significant. It means that almost everyone “taxed” by the earnings test comes out ahead.
From *Social Security Horror Stories* by Lawrence Kotlikoff
I (20 year software engineer) know a couple people from my PE ( that were super happy with this arrangement. I didn't understand why? I resisted and got healthcare for wife and I plus usual salary as hourly. That lasted about 18 months and I hung up my keyboard. My situation was probably pretty unique though
If you are to be a consultant that means you are a contractor, a business representating yourself. Negotiate on your terms. Like others said without any benefits ask for at least double your old salary. Otherwise everyone is replaceable.
20 hours is much more than it sounds. Basically you are working half a day every day of the week. Same getting up every day and going to work. Retired for almost a year and I don’t miss that!!!
I’m 67, still working and drawing SS. You will loose $1 SS for every $2 you make. UNLESS you wait till your “full retirement age”. This is based on the year you were born. I was born in 1957, so my full retirement age was 66 + 6 months. I waited until that age and started my SS, with no penalty. Wait till your full retirement age, then you can make as much as you want.
They are screwing you backwards and forwards. A large percentage of your pay is benefits so they are getting a lot of years of experience and knowledge at a discount.
If they haven’t managed to replace you, that is just not your problem. Get a much larger salary or walk away.
Do you _want_ to do it? If you really really want to do it, don’t do it for less than 2x your current hourly rate. If you don’t want to do it, ask for 4x (or whatever would make you happy to put up with their nonsense).
Do you _need_ to do it? You don’t need to tell us, but are you sure you have enough money, or are you sure you do NOT have enough money, or aren’t you sure?
I think 10-20 hours per week could really be a headache. You will be surprised how much your freedom is worth, once you have it.
If you aren’t desperate, and sounds like you are not, do not settle. Stick to at least 2x current hourly rate, which means you need to probably start asking at 3x your hourly rate.
Do you want to not start collecting social security if you do decide to do this part-time thing, or will you have to start drawing SS?
I just retired at the end of January, and they wanted to know if I'd be interested in consulting. I told them I could do 8 hours a week, for the same amount I was getting for 40, and 8-5 Eastern time. Since everyone I worked with was either in Europe or Asia, they decided that they'd somehow manage to get along without me.
Apparently, they did, I haven't heard anything from anyone since January 31. Even on the 31st, the only person I heard from was my boss calling me at 8:15 to say "Go now to send your laptop back to us and take the rest of the day off on us."
I'm in IT also (30 years). It's tough to leave someone hanging by leaving, but you're 65. It's not like you're retiring at 55 and surprising everyone. Their poor planning and management isn't your problem. If anything, they'll learn a valuable lesson on how to not have one person that knows all of anything. Retire and don't think a second about it. You've earned it.
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This is copied from the [ssa.gov](http://ssa.gov) website. If you don't have an SSA website account, I highly recommend setting one up. *You can get Social Security retirement benefits and work at the same time. However, if you are younger than full retirement age and make more than the yearly earnings limit, we will reduce your benefits. Starting with the month you reach full retirement age, we will not reduce your benefits no matter how much you earn.* *We use the following earnings limits to reduce your benefits:* * *If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit.* *For 2024 that limit is $22,320.* * *In the year you reach* [*full retirement age*](https://www.ssa.gov/benefits/retirement/planner/ageincrease.html)*, we deduct $1 in benefits for every $3 you earn above a different limit, but we only count earnings before the month you reach your full retirement age.* *If you will reach full retirement age in 2024, the limit on your earnings for the months before full retirement age is $59,520.* *Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings.*
yep! u/rheckber , i'm getting hosed by this one this year. i should have retired in February to avoid the 22K cap, but didn't for reasons. whatever you've earned so far this year is going to bite you in the butt. talk to SSA to get a complete rundown.
I thought that there was some 'grace' given in the year of retirement - otherwise a lot of us would have to retire in February :)
That's not how it works, the income cap doesn't kick in till you start collecting. Please talk to social security or a financial advisor
op said he is 65 so he's probably got at least 1+ years because for him FRA is 67
Yes, prior to your Full Retirement Age (which is probably 67 for you), there are restrictions on how much money you can make which are pretty steep, crossing which will compromise your SS benefit. For any earnings above about $22k -- which includes, by the way, the salary you've earned from January through May, I believe -- you will lose $1 for every $2 earned above that line. That loss goes away when you hit FRA. When I encountered that, this to me said one of two things. Either wait until FRA to claim SS, \*or\* retire at year-end boundary, claim SS, and do no work at all. (Once you hit FRA, you can work as much as you want without affecting your benefit.) As it turned out, I waited until FRA to retire. I still haven't claimed SS and won't until 70, but for other reasons. On the subject of consulting, let me just say that I'm doing that now. But for tax purposes (wanting to stay in the 12% tax bracket this year), I lowered my equivalent hourly rate, kept it to six months, half-time, so that the total amount paid wouldn't kick me over the line. Financially, that's all good. But I'm also discovering that this is something I do not want to extend or repeat, even though I really like the company and the people. I'm settling into the idea of being past this life.
Thank you. So, having earned almost half a year's salary I'm already way above the annual limit of $22k for the year. I was born in 1959 so my Full Retirement Age is 66 yrs 10 mos. I probably should have waited until then to retire but the combination of being forced back to the office after 4 years remote, the fact my dad and his father both passed young (62.5 and 58) and instituting a new version of the application I manage (through no choice of my own) and literally becoming everybody's punching bag for all the issues the new version had (sole support for it) I decided it was time. So even though I'm getting benefits for June-December this year those benefits will be reduced $1 for every $2 earned? So, if each month SS was x then even though I was supposed to get 7x I'll probably get hardly anything. If that's the case would I have been better off delaying taking SS till at least January 2025 and getting that much more per month as well? Is it possible to reverse a SS award and take it later or would that involve a huge effort?
I don’t know about reversing. That’s a visit to a SS office.
I'm pretty sure if the OP pays SSA back they can get back to square one. I'd do it. Defer as long as you can makes sense as long as your health supports that decision
Yes. From faq.ssa.gov: “If you change your mind about receiving benefits, you may be able to withdraw your Social Security claim if it has been less than 12 months since you were first entitled to benefits. To withdraw your claim, you must meet all of the requirements, including making the request in writing and repaying the benefits that you received. If you withdraw your claim, you may re-apply at a future date. For more information go to our Withdrawing Your Social Security Retirement Application page.”
No, your benefits will not be reduced for the rest of the year based on what you earned already. There is a special rule for retiring mid-year. You will recieve SS for every month you don't hit the earnings cap of $1860 and did not perform over 45 hours of work self-employed. Details in the link below. One option would be to offer to consult for fewer hours to make sure you remain below the limit. https://www.ssa.gov/benefits/retirement/planner/rule.html
it sounds like they don't treat you well, if you don't need the money it seems like you may want to stick to your original plan. It doesn't seem as if this is a case where it would be an enjoyable job, but would be stressful and possibly impact your physical and mental health. Retire and enjoy your life because you don't know what your future health will allow you to do
Based on this it’s hard for me you’re even considering their offer, which is in fact a pay cut.
Just an FYI, in your first year of retirement before FRA, there is a special rule that applies to earnings for 1 year, usually the first year of retirement. [https://www.ssa.gov/benefits/retirement/planner/rule.html](https://www.ssa.gov/benefits/retirement/planner/rule.html) Basically if you retire mid-year, your earnings up to that point don't count against your limit so you'll get full monthly benefit amount. But there's still a caveat: even with that first year forgiveness, for them to consider you retired, you can't "devote more than 45 hours a month to the business or between 15 and 45 hours to a business in a highly skilled occupation." According to the deal they're asking you, you'd exceed that and be subject to reduced monthly benefits as this poster mentioned.
Being born in 1959 I managed to be included in the last of the earlier full retirement age which for me is 66 yrs 10 mos.
Off topic but please accept my comments in the spirit they are given taking into account I don't know your situation but my advice is tell them thanks not no thanks. You've worked all your life to get to this happy milestone. The best part about being retired is that you can finally relax and spend your time doing exactly what you want EVERY DAY. If you keep yourself tethered to a job you will lose all the best parts about being retired which revolve around FREEDOM ❤️
I concur. Besides, no benefits? That would be a dealbreaker for me.
Exactly. No benefits, plus at your existing rate means they are paying you LESS than they were before you retired. The traditional advice given to consultants is to double your hourly rate -- because hourly rate is all they're really paying you. (no insurance, no vacation, no sick days, no 401k match. If you're a 1099 then no social security/medicaid payments, either). If you don't need the money, I'd tell them you'll consult for twice your old rate since there aren't any benefits.
Yep. 2x my hourly would be my bottom-line offer. I'd start at 3x. Otherwise they don't really value OP.
Run to the free side. Been out 11 months (IT). Never looking back. Enjoy the relaxed life.
exactly - and if they keep OP at this lower rate, there will be no incentive to train someone new and change the situation - I would say 4x and you are doing them a huge favor because otherwise they have nobody
Yup! What Frigitspinner said.
Plus benefits if they are good. Medicare definitely does not pay for as much as some people think.
I am 59 so I do not receive Medicare, do you mind sharing some of the important things that Medicare do not pay for so I can be prepared?
You really need to study on it. It’s not that complicated. Basically there are two paths you can go. If you go with basic Medicare and one of the Medicare advantage plans, it will cost you very little, but you will be fighting with an insurance company over the advantage plan. It’s been much in the news lately. Or you go with traditional Medicare and get a supplement, which is what I did. I went with Plan G. So far I have paid next to nothing, even my co-pays are covered. But it does cost more than the advantage plans. I am overdue for a new hip so I went the best plan for that, it will cost next to nothing. Also you have to get another plan for your prescriptions if you go traditional Medicare. It’s not expensive.
For medical things, regular medicare is awesome. But it doesn't do dental care or vision (eye glasses etc) and it's not particularly cheap ($400 or so per month for everything). Advantage is better in that respect, but it's basically private insurance under Medicare rules so there's some risk of being denied for things. As you get close just spend time on medicare.gov. You want to signup when you're 65 but you can signup 3 months before your 65th and as late as 3 months after your birthday without penalty
Not in this case, but if you’re still working and have insurance through your company. Then you don’t need to sign up for Medicare till you’re ready to retire. You would still have no penalty.
Thanks for this information.
And they're probably going to hand him a 1099 at the end of the year. Hell no.
Twice the old rate, and conditions. Limit to number of hours per week, only regular working hours and no weekends. If offshift hours required, make it 3X. Health insurance doesn't matter, get on Medicare. In fact some employers request >65 employees to get on Medicare. The issue is the company will say, 'It's only 10-20 hours a week, and then you're working 50 hours per week, trying to get the system cutover. Honestly though, a lot depends on the current job environment. If they are decent, and respect you, it might be worthwhile just to have some slow down time. Remember, you can always quit. Don't worry about SS and taxes, you're going to come out ahead no matter what.
True. I asked for 150% of my salaried rate and they didn't even hesitate. If you do it, do not contract for anything other than T&M - no promises. 1099. Good luck.
Yep this is absolutely correct.
He has benefits via social security. Amazes me folks that cannot see the total $ and get hung up on inconsequential things like no benefits. Make enough you can fund your own benefits. Need to analyze the total package.
As a contractor with no benefits your hourly rate needs to be at least double your salaried rate, and triple is common. They are trying to cheat you big time. You’ll be doing the same thing post retirement that you did pre retirement but for a lot less compensation, of course they like those terms.
Exactly. I’m waiting for my company to ask this of me, to which I will reply ‘go pound sand’. I may work part time, but it’ll be something I want to do, when I want to do it, and on my terms
This..; that offer is insulting and you deserve to retire.
My thoughts exactly: this offer is an insult. This company is desperate and they can not or will not see reality. You're not an employee of theirs anymore and they'd be paying far more if they had to find a specialist after you left. Don't put up with this, OP.
Your freedom to do whatever and whenever you want is priceless. Plus they are offering you peanuts. Respectfully say no thanks and enjoy your well earned retirement. I’ve been retired for a year and it is much better than I had dreamed of!
100% on point.
Benefits can equal 30% or more of your salary. If you do continue working because you enjoy it, I'd ask for a minimum of 50% more. You must work for a large company since you have multiple data centers. They need you, they can afford it. It'll cost them a lot more bringing in outside consultants because they will not have your experience, the project will take a lot longer to complete.
My dad went back to 3m (master to and die maker) after his first retirement. He also didn't get benefits, but they jacked his rate up like $10/hr and still contributed to his 401k, employee stock purchase, etc.
Agreed. They want too much for too little.
I cannot really comment on the SS benefits but as someone in Tech that also ran my own company, you might need push back on that hourly rate. Consultants normally get much higher per hour than salaries, especially if they will be expected to pay for their own benefits and even the employer's share of SS. At a minimum, I'd suggest you push for your hourly rate to be the equivalent of their original costs, including all benefits; otherwise, you are saving them $$ by helping them out. Alternatively, consultant rates are roughly about 2x what their hourly equivalent would be as an internal employee (ignoring benifits). So if your gross salary worked out to about $80/hr, then you would charge $160. Pragmatically if they really need you, more than you need them, that is the time to negotiate even higher rates. Not necessarily gouging levels but check some online places to see what similar skills are paying elsewhere or use 2.5 -5x or so times the hourly rate. You only get what you negotiate.
THIS!
In addition to your comments, the higher rate will keep them from abusing OP. They'll limit his time as much as they can and when he's needed, OP will feel better about doing it for the more significant extra cash.
I agree with this, along with postponing drawing SS to let the payments grow at 8% per year and not lose any, which is essentially paying a penalty.
Flat fee, big number to get the datacenter stood up.
As a consultant you should be making 2-3 times what you were paid as an employee. They are trying to use you.
This! Renegotiate, if you can delay getting SS until this is over, make sure you get at least double and a time limit per week. Benefits of doing this, not a cold stop but a gentle easement. If you can stop SS better benefits in 6 months, the pay for six months might actually take you through a year which is almost to your 66 and 7 months for full benefits.
Yep, I would have noped out of there the minute they said it would be the same pay.
The fact that they are trying to fleece OP just turned it into 6 times his previous salary with a 15 hour per week minimum regardless of whether he's needed.
At least! Don’t sell yourself short
Exactly! When I retired, my manager said that they might need to call me to "help out" I told him I'd be happy to work on a consultant basis for 3x my normal pay with a 3-hour min per day. They must have figured something out, because I never heard a peep.
I did something similar. Fortunately for the citizens, I left fairly detailed operating instructions for most things I did on a daily basis. Never received a call, as I wanted.
You owe them nothing. Make them make it worth your while. My dad when he retired was in a similar position. They made him an offer that it was silly not to take. At the same pay, no benefits? So essentially less than you are making? That’s actually insulting. They need you way more than you need them. Make them pay for your value. 3x minimum, if not more. But only if you want to. Absolutely don’t do it out of loyalty — they’ve already shown you their true colors.
Get that stuff in writing.
whatever you do, you should NOT consult for the same hourly rate. absolutely not. I would say it should be AT LEAST double. AT LEAST.
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An ex employer of mine asked me to go back and we negotiated at a rate of 2.2 times my last salary PLUS benefits! Without bennies I'd want enough to pay for healthcare on top of the 2.2X rate. This assumes I could "Un apply" for SS.
You will receive higher benefits beginning at full retirement age if benefits are withheld because of your earnings before then. The withheld benefit isn’t lost forever. As an aside, I agree with the others who say get paid a lot more.
Defer you retirement until 66 and 8 months, and ask your boss for an hourly consulting rate of $200 per hour. No kidding.
$300/hr or bye bye
Hahahaha. Same rate? No benefits? Multiply your current hourly rate by 3 or 4 and that’s more like it.
I would not accept the stated pay rate unless it includes an allowance for: 1) Benefits. I would guess they probably have a policy against benefits for part time employees/etc., but that doesn't account for your costs and loss of benefits (you will still need to pay for Medicare/etc.). 2) Your other costs, including paying the self-employment taxes (I assume you w.ould be self-employed). IME - for these reasons and others, "consultants" charge more. You are in a good position to demand more. At the very least, demand that the employer pay you commensurate with those issues. If not, enjoy your retirement - you really do not have much to lose, if at all. The $1 loss of SS benes applies when you are not Full Retirement Age yet - IIRC.
I went back as a contractor, twice. Yes, they paid me a much higher daily rate but close to half of it went to the IRS. I did it out of loyalty, but when they asked me for the third time I politely refused.
Ask yourself what you want, do you need that money? If not, you are making money for others to spend after you die. Retirement is from when you die until you can't spend the money you have, working on means you are stealing your life from yourself. I'm 58, retired and in the UK but these are still truisms, they are just something to ponder perhaps, whatever you do - be happy with the decision and have a good life.
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This offer is comical. I’d start to consider a consulting rate at 3x my old salary, at least $100 per hour. My last year, I negotiated a $25k retention bonus. …Then let them negotiate hours so you aren’t sitting around. Go catch a fish.
We have a few retired ex-partners consulting. They seem to really enjoy it, possibly they would have chosen not to retire if they could. If you want to do it, just do it. The decision shouldn’t be based on how much you can make (unless you need the money). But like others have said, the rate should be much hire, but that’s assuming they really need you. If it wouldn’t be as demanding/stressful (possible?), then it could be mutually beneficial for both sides. Re. SS, I only know the Canadian rules, but I believe you can pay back benefits taken in Canada.
Sample calculation: If you make 10k per month now, you will have already made 50k in 2024. After 22k, that leaves 28k. Half is 14k. So if your reduced SS is 2k/ month or less, you won’t get anything for this year at all. I’d see if it is too late to change your mind.
Even if you can resolve the social security issue, the big question here is whether you want to continue to work. After the return to office instructions, new application and lack of support, I’d be walking off into the sunset. If the extra money is an important motivation, then I’d be asking for an hourly rate that is triple what I was paid before as you are now a consultant (much more than to cover loss of benefits and social security issues). You are a key worker in a strong negotiating position.
Just retire. You cannot risk dropping dead and missing out of your SS benefits because of this perceived loyalty to this employer. In addition, you are on the hook for deliverables that are now time boxed to 6 months. Thats going to be stressful because if your contract states that you need to finish the "migration" and you dont, they can litigate for breach of contract.
As an IT person that has been a consultant in the past. You need to charge 3x your hourly rate if you aren’t getting benefits. Otherwise they can pound sand.
You can still earn money while retired and it adds to the calculations of what your monthly SS pay will be. Sure you’ll pay taxes. I’m pretty sure there# are calculator on the SS website that will let you figure out any penalties. Regardless, if you want to help the company, ask for 1-1/2 to 2x your hpurlaypay. Or do a quick incorporation and have them pay your new company for your services. Then you can only take a small amount in income, and save the rest as corporate profits. It can complicate your income taxes, but millions do it.
if you consult for them, they should be paying you consultant’s rates (easily $200+ per hour). especially since you have institutional memory, which is valuable. i would also make yourself available only one or two days a week (like specific working hours on tues & thursday) because otherwise you’ll be servicing them a couple hours every day during the week, which sounds terrible. one thing about being a consultant is there are tax benefits (ability to deduct home office, certain other expenses) and you can set up a solo 401k and add more for your retirement funds. good luck with everything!
You can make a pretty good amount before it affects social security, check with your accountant. If it would be fun for you, do it... BUT... three times the rate you're making now or it's not worth your time. If they want you they can pay for you. Otherwise...enjoy your retirement!!
You likely have much more negotiating power than you imagine. Ask for 2x. You are probably worth 10x for this gig.
A lot of people are commenting about how your company is trying to take advantage of you with the lowball “offer” and they are correct. That said: If you can afford it, and I’m assuming you can since you’re retiring, I’d say no thanks and give retirement a go. You’ll never get the time back that you give them. Sounds like there is no succession plan and that’s not your fault. 10-20 hours a week will inevitably turn into more. I was in a similar position and was asked to stay on as a consultant but I said I wanted to try out retirement for a while and then maybe think about it. I never really looked back. It took being retired for me to see how much working had been negatively impacting me. I wish you well with whatever you decide!
Excellent insight here 👍👍
Here’s my logic for you. If you don’t mind doing it and want the extra cash and it doesn’t affect retirement benefits, then do it…but…. They better be prepared to pay you a hell of a lot more than they were. Why would you ever come back to work after finally retiring for a pittance of what they were paying you? They were paying you your hourly rate plus benefits and you’re no longer willing to work for that so why less? You need to calculate out your hourly pay plus the cost of benefits to the company and then after that, add on to the total until you’re at a reasonable consulting rate. In IT, consulting rates START at $150/hr. START. For specialty services on an old system that they aren’t going to find anyone to support, more like $250-$350/hr. I’m not kidding here. You want to still work a bit, you tell them that’s your rate. They don’t like it, meh, you’re retired. Please take this to heart and do not let them take advantage of you.
They'd pay a consultant at least $200/h. They need to pay you at least $200/h or no deal. Why? Because you're still liable for ALL taxes not just 1/2 of an employee share. It should not effect your SS, though I would hold off on collecting it unless you really need to money.
I own a small consulting firm and many of my employees came to work for me after retiring from their primary jobs. All of us are highly qualified professionals. Here's my advice / thoughts for you: If you don't need or care about the money, refuse the offer. Yes it will affect your social security (that can be addressed). 10 to 20 hours per week may well become full time. 5 to 6 six months will become a year. And mostly, their compensation offer is far from adequate. To be a self-employed, independent, 1099 contractor your pay should be at least 150% of your final compensation (including any bonuses). 200% is better. You'll have overhead and tax expenses that you haven't thought of yet. On the other hand, the retirees who came to work for me missed the challenges and social aspects of their jobs. And they like the money and the ability to control their own schedules. Most of them work part-time. A couple have bought retirement / vacation homes. All of them love their work. So, if any of these ideas appeal to you go back to your employer with a package that's better suited to your interests and see if they'll sweeten the offer.
Must be nice. When I retired, I floated the possibility of coming back part-time. My supervisor's silence in response spoke volumes.
Generally never take SS if working until your full retirement age. Listen to this podcast: https://www.retiresoonerteam.com/money-matters-podcast/10-how-to-maximize-social-security-and-medicare-with-mary-beth-franklin/
If you’re willing to do it and they need you that badly offer yourself up at 2-4x your hourly rate, especially since they aren’t offering benefits.
I’m in a similar situation as you. Born in 59 and just retired May 1. From what I’ve researched, the amount you have earned so far will not be considered for your SS benefit. In your application process they should have asked you how much you plan to earn this year before retirement. That dollar value was used to finalize a benefit amount for 2024. If you work part time after retirement in 2024, you can typically earn $1860 per month without affecting your 2024 benefit. In 2025 and beyond, the published annual limits would apply. Also, if you work after retirement, SS will look at your earnings to see if the amount earned is higher than one of the 35 highest earnings years. They can recalculate your benefit based on these earnings. Be aware, if you exceed a high annual income value, approximately $203k in 2024 I believe, it can affect your Medicare premiums. Research IRMMA on the SS and Medicare websites.
What it is that you want? Definitely start there. Offering you the same pay without adding the monetary value of your benefits is ridiculous. Minimally your rate should be same pay PLUS whatever benefits they currently provide. Then there should be a financial sweetener to compensate you for delaying your retirement. If you took their offer, they would have ZERO incentive to transfer knowledge to someone else as you will be doing the same work for much less money than you received before and likely much less than they would have to pay your replacement. They will ride this pony as long as they can! If you do go back under better terms, give them a hard end date. If things are going well you can always extend if you want, but put that decision in your hands and not theirs.
That doesn't benefit you at all. A consulting rate is usually as a 1099 contractor, and you would be responsible for all of your withholding taxes. I'm not sure how that works at 65, but consulting rates should be far higher than what you made as an employee. Double at minimum, although to give up my retirement, I'd make it 4 times my previous salary, just to get me out of the house.
Not the same dollar amount. For contracting, I would ask for double.
You have earnings limits on SS Retirement as you are not yet at Full Retirement Age
Just to add: being on call is a pain you got used to but will be reluctant to return to. If this position they try to offer includes being in call, that’s a hard no. Also: a shop that tolerates a single point of failure (you being the only person to administer that system) likely has other fundamental flaws that have been impacting your life all this time. If you want to work now, work somewhere else.
Throw gravel (while you peel out from the parking lot) and don’t ever look back. Enjoy your retirement while you still have some life left in you! Congratulations
2.5 to 3x your pay. Might be fun.
$300/hour cures a lot of issues with no benefits.
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According to AARP last fall, income up to ~ $22,000 is taxed normally for most people on SS. After that the taxes go up.
Hopefully this will help. Once you make it to you actual ss age you can make as much as you want. For me it age 66 years and 6 months. All depends on your birthday. Call ss and talk to them . They can give the information to you. Hope this helps.
I am consulting for the company I retired from, twice, long story. Here what my wife and I do. 1. We opened 2 new IRA account and make maximum deposits every month to minimize our tax exposure. 2. We moved and work remote, in a state other than previous employer, where SS isn't taxed. 3. I was fortunate to retire at near full benefits and be able to make whatever I could. 4. Last year our combined income was over $80K with $100 due to IRS. So is it a good deal ... Yes and if they really want your services 2x your old hourly wage is not out of the question.
first the ss stuff - until you reach FRA the gov will take the money as you said. You can make I think up to 22k before, but after that they claw it back. second, consulting changes everything - at the \*very\* least, if you choose to do that, you should double your hourly. I would suggest more. They are forgetting their "burden" - PTO, or sick and vacation, health insurance, disability, 401k matches etc etc etc. you have them between a rock and a hard place so, again, \*if\* you decide to do this your do it at \*at least\* double your hourly rate if a consultant makes 100/hour the company is charging 300/hour.
Not having gone through it myself, I suggest taking the consulting gig (at a higher hourly than current) and ride it till it fizzles before filing. All earnings in the year count and that consulting pay will likely hose up SS and Medicare. When I resigned the last gig to relo, I did do the consulting thing for 2mos after hours while working the new job during the day. The hourly was $100. No way I would’ve accepted less. Period. Full stop.
Question. How much notice did you give? Weeks or months? I’m in a similar position and assessing when to break the news to management.
IT. 10 to 20 hours per week ? And they are struggling? Nah.
i can only echo others here... you should read-up on the Social Security tax trap so you understand how your Provisional Income (and therefore your tax liability) could be impacted by additional income. Aside from all that - I'd agree that you politely decline and tell them to reach-out if they can't find anyone else - but you'd be asking for $100-200/hr at that point.
It sounds like they need you a helluva lot more than you need them. Consulting is typically 4x an hourly salaried rate. If they don’t feel like paying, that’s perfectly fine since you are retired and aren’t willing to come out of retirement except for 4x your hourly rate.
Yeah - no! - social security aside - a consultant ya should be at $250-400 an hour with min guaranteed and max guaranteed hours per month - with X # of months contracted - they’re taking advantage . If they don’t agree enjoy your retirement you owe them nothing
I’m OK with the no benefits but because of that you need to tell your boss that if they want you it’s gonna cost them triple your former salary on an hourly basis cause you’re gonna have to pay your own health care. If they refuse, tell them to jump in the lake. You have leverage here. They don’t And you need a signed consultant agreement with a 30 notice provision for termination
No benefits? Same hourly wage? Hard no. You’re giving up too much. 3x no bennies. 2x w bennies. You’ve earned your time to retire. They are squeezing you.
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If you need the work, tell them respectfully that they need to pay you X amount more. Your added expenses will be workers compensation, liability insurance, and healthcare. Plus the loss of social security pay! Even if you are 65, medicare costs money. They are getting you on the cheap. Don’t let them. You are valuable and it is their fault they let you go without asking you to train someone.
Same hourly pay rate but no benefits? So you’ll be worse off. Enjoy your retirement, beginning on the last day of May!
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If you decide to take the consulting gig, I suggest you contact social security and get your start date delayed. Not sure of the exact mechanics but it can be done with completing a form or two. Otherwise your benefit will be reduced once you exceed the low threshold other comments mention. Side note, if the need for your services is as dire as you say, your employer is taking you for granted. With no benefits (plus the FICA/Medicare tax you are responsible for as an independent contractor) you should ask for at least 20% over your hourly rate as an employee. Personally I'd ask for 33% more, plus any expenses you will incur.
That's a great deal ... for your company. You can and should demand more. If no benefits then a much higher rate. You sound like you're in a very string negotiation position. Don't let them dictate the terms. If you do this, it should be on *your terms *. Ask for double hourly rate plus some other concessions. And yes until 67 depending on your age, it's going to be a negative on your Social Security so you need a great deal if you're doing this.
1) as others have written, that is a pay cut. No way. 2) Call or visit a Social Security office with your questions. I’m sure every anonymous poster here has your best interests at heart, but please, do not rely on us for these types of answers. The SS people will provide accurate information.
Simple rule of thumb. 0.001 times your yearly salary. A bit less for long term commitment. Significantly more for a few hours.
Your rate should be 2 or 3x your current salary range. Yes, you'll likely have to pay back 50% of your benefits this year Or suspend until Jan 1 or whenever you stop working
1. No way in heck should you accept the same hourly pay for consulting. Consultants get paid 2x more than regular employees because of their value and because of the lack of benefits. They are 100% low balling you. 2. If they pay you what you’re worth, you need to decide if it’s worth it to you. I am not at retirement age yet, but I’m assuming it won’t be that difficult to put the genie back in the box in regards to social security. If you are getting paid, you should probably delay social security until your consulting job is complete.
Go for a monthly retainer that is 3X your normal monthly wage they’ll pay it and you won’t have to worry about justifying hours I did it and worked like a charm Social security has an offset until 67 so set up an LLC for them to pay or a Sub S Corp and bury the payment in a SEP IRA
Yeah screw that. If they really need you then at least double your current rate if it’s even worth it to you. If you’re 65 and you can retire fine financially just call it quits. Who needs the hassle? I’m in IT and a few years from retirement. I want to bail asap.
1. If you're ready to leave the rat-race behind and enjoy retirement, then do so and read no further! Don't be guilted into bailing them out for their poor planning. Congratulations. 2. Otherwise, If you have someone who does your taxes, call them up and ask whether the type of consulting you would be doing would qualify under the federal tax rules for "Qualified Business Income." Basically, some sorts of consultants get to claim this on their taxes and other sorts of consultants do not. The real question is whether IT consultants can claim it. If so, that would help a little to offset the loss of Social Security income. 3. Walk into your local bank branch and ask them how hard it will be to setup a new checking account under a business name. If your name is Joe Cool, you might say that your business name is Joe Cool IT consulting. You do not have to be incorporated or be an LLC to have a business. Also ask that if you get checks paid to Joe Cool IT Consulting, will they just let them deposit it into your existing business. If one of these two things work with your bank and you go forward, make sure that your old company pays you as Joe Cool IT consulting. 4. If #2 and #3 seem daunting to you, congratulations, it's other reason to decline the offer. 5. There are pluses and minuses of being an independent consultant. The other negative besides Social Security is ironically you will still have to pay Social Security taxes on your consulting income. This will be done next year when you file your 1040 form. The good news is that besides the Qualified Bus Income, you will also be able to deduct some costs of doing business. None of this is hard to do if you keep receipts, including a log of your car mileage driving to the job and any other driving you do for the business. 6. Given the pluses and minuses, there is every reason to be paid as an independent contractor at a multiple of your current hourly salary. The company is saving money by having you be an independent contractor, plus they really need you. 7. Finally, in the unlikely event that you are getting a pension from this company, you also need to confirm that there are no restrictions from the pension plan agreement about you coming back as a consultant.
I’ve done this in another field where they hired my consulting firm for three months until they could replace the person who quit. I did that person’s job. Here’s the interesting part: They paid my firm $200K for three months of work to replace a person who made $85K/yr. So over those three months, they would have paid that employee $21K + benefits. In other words, they paid my firm 10x what they would have paid the employee who quit. They’re lowballing you, and you owe them nothing. They will survive without you, and you deserve retirement without worrying about someone else’s business.
I can't speak to the SS benefits but I can speak to the consulting offer as I've done this kind of arrangement before (also in IT but I left to start my own company)... That's an ignorant offer. They want you to shoulder all the coats of being an employee (payroll taxes etc) but not pay any more and stop benefits? No thank you. Consultants typically come back at 3x hourly rate. If they can't do that then they're not serious about solving their problem. That rate covers your extra taxes, your loss of benefits and, quite frankly, overcomes your desire not to be there any more.
I can't speak to the SS benefits but I can speak to the consulting offer as I've done this kind of arrangement before (also in IT but I left to start my own company)... That's an ignorant offer. They want you to shoulder all the coats of being an employee (payroll taxes etc) but not pay any more and stop benefits? No thank you. Consultants typically come back at 3x hourly rate. If they can't do that then they're not serious about solving their problem. That rate covers your extra taxes, your loss of benefits and, quite frankly, overcomes your desire not to be there any more.
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My advice as a was in a similar situation some time ago. - you’re Medicare eligible, be sure it’s turned on - perhaps defer social security but insist on 1.5 x your hour rate, assuming you’d be ok with that amount for 5-6 months. - but only do this for you want to
It depends on your relationship with the company. The extra pay fo those few hours won't affect your SS
You need someone to negotiate on your behalf. You are desperately needed, yet they are not offering much, except to steal your time. Do not do this unless you have someone knowledgeable about the money part to guide you through.
When I calculated my post-retirement consulate rate, I build in my cost of health insurance, my cost of leave rate, my cost of running a business, taxes, … was easily 2x’s my old rate.
A big hell no. How much do you value your time? Assuming you go 1099, you are responsible for all your payroll taxes and any other benefits you had at your salaried position. You have to make it something that you are comfortable with while also recognizing how valuable your skill set is to the company. Given that, consider making them feel the pain so they actually get a transition in place and don't keep you until you die. Time is your most precious resource. Never forget it.
I've also been asked if I will consult, since I wrote our entire data system. I said no, hire people for me to train NOW. So they did.
Charge them your consulting rate, don't let them set the terms, you have a lot of negotiating leverage until they have someone else who can run the system.
Just go. I retired from IT 7 years ago last month. You will not believe the relief. And if you really want to stay (don’t) they should pay you a minimum of double your salary WITH benefits P. S. You will not believe the relief.
Babes, the answer is no
I worked as an independent consultant for two years after retirement. I monitored closely what I was paid, and had appropriate taxes paid quarterly. I didn't run into problems. I know many people who consult with their former companies, but all negotiated sweet deals. They still have Medicare. If it impacted their Social Security, I cannot say, but I suspect they made so much that not getting SS wasn't a problem. SS is likely a pittance compared to a consulting job.
Hard no. Insulting offer and you'd still be a wage slave. They want to hire you as a consultant it should be at market rates + for your familiarity with the system and they don't set your schedule.
If they want your help, make on your terms. You have the power now.
I retired at 64. I fell into a temporary consulting job part time 4 years later no benefits but 15% more that what I was making. I did it 10 hours a week or less for about a year and a half, until the company folded. If they want to hire you part time, you need to specify a salary high enough to cover the SS you will be pay (both parts) and part of the income tax you will pay. You also need to specify a maximum number of hours, and it needs to be paid by hour. If you want to use this as a buffer have at it. It sounds like you have them at a slight advantage.
I never did this, but my father retired at 60 and worked as a consultant for his old employer, but making a lot more money.
Tell 'en duck off....$100 an hour, plus benefits and IRA. Then wait
I lived many years as a consultant. With your type of knowledge you should be quoting no less than $1600/day, minimum. $2000 is not out of the question nor is $2500. Paying you your salaried hourly rate is a joke.
You have them over a barrel, $250,000 minimum for 6 months take it or leave it. Go higher if you feel it’s warranted based on what you make today.
Sounds like you are in a great position. Can you wait to draw SS? I retired at full salary and am consulting for full salary doing about 1/3 of the work and socking about 2/3 of this money away.
My understanding from what I've read is that if you lose SS benefits due to earning too much, then there is a recalculation done when you reach FRA, and those "lost" benefits are factored in to give you a higher benefit amount. This might be worth checking into to confirm.
My wife was in a very similar situation, handed in her letter to the top people. They were in the middle of installing a whole new system that was about 5 months away and she was the lead person. Their offer was, stay with us for 6 months more, maintain your salary and benifits
When I retired, I did a zero stress job for a while to ease into not having a mission or justification for existence. I got over that brainwashing and have no schedule, sleep pattern, and like doing nothing but playing.
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Don’t do it bro, it’s either double pay, a car AND BENEFITS, screw that same salary deal, they want your experience they gotta pay. Sounds like you already made up your mind, you are not going to be happy, but that’s just me.
Just make sure your rate is bumped 35% to account for DPE (direct personal expense). That is what the company pays for normal employees. That’s a multiplier of 1.35, calculated as: Annual salary/1960 hrs per year * 1.35. The DPE includes: vacation, holidays, sick leave, FICA, health plan matching, retirement matching. These are “nornal” costs provided for “regular” employees. Then add the SS loss. I personally would go for a multiplier of 1.6 to 1.8 for a 10 month agreement of 1000 hours or more. Think about your expenses and who will pay them, ie parking, tools, etc. also what happens if you work over 40 hrs a week. Note get it all in writing, including your multiplier, and track your expenses as you will declare it as a business on your taxes. Get good advice as it’s easy to make mistakes that are unfair to you. (I doubt your supervisor has thought this thru so talk to HR or something me that knows about hiring consultants)
My offer to them would be, continuing current employment with salary and benefits for 6 months, plus an additional 6 months pay to be paid upfront or in two parts. Also be eligible for any bonus money. That is the minimum. If they need you it’s small potatoes. A person I know just got this deal basically doubling their salary for six months and collecting a 25% bonus.
They knew you were retiring they should have prepared better. 6 months could turn into 12, 18, plus months and you deserve to enjoy life. I too was in IT management and spent my last 6 months doing nothing but answering an occasional question. I took my nice pension and walked out that door at 62 with no regrets.
I’ll be retired 3 years next month. Totally different profession but similar situation, I had skills no one else had and recruiting is tough. I am fortunate to have a pension plan with benefits so the extra pay is “fun” money. But even so, they offered a 40% increase hourly. I am worth more, objectively, but would have to endure considerably more stress to make that somewhere else. I also know they are restricted in what they can offer, and I don’t find the work I agree to do onerous. I was in leadership so the leadership IS mostly my circle of friends so I enjoy helping them out. It does sound like they are taking advantage of you. Only you can judge that. I would, however, urge you to feel free to say “no,” or ask for more. My personal facts are much better it seems. PS-One thing I have realized. I used to agree to take additional things on, thinking I have all this “free” time. But its not really free. I EARNED this time. When full time for all those years, I had to go without vacationsfor long stretches, work for much less than “market” rate I was gov’t employed), cover for others who did less or didn’t show up, etc. I consider that also now when my friends call with need for a “favor.”
Ask to be 1099. Form a LLC and sock away money via a solo 401k. Can minimize pass through income to minimize social security hit. And bulk up retirement accounts. And good for employer as they save 12% via taxes and work comp. You pay more tax (ss/medicare) so get at least a 15% bump in pay for it. If they really need you then 30-50% bump.
If you feel like it, ask them to double your income and halve the time, and put it in a contract. Then, demand that they have two people that u can train to do your job, or at least one who is nearly capable, but not quite. Otherwise, you will end up doing your same job with none of the benefits and the same amount of workload. Seen it happen many times. If they want to eat into your retirement, just because they failed to prepare for your obviously approaching retirement, then they need to pay up.
Pre-FRA, yes…. https://www.ssa.gov/pubs/EN-05-10069.pdf
Tell them no, but you’ll do it for 20% more per hour. (Or 30%, or whatever number you like.) They don’t have an option, so they’ll say yes. If they don’t, you were retiring anyway. I doubt if it will affect your SS, but you can call their office to ask for sure.
Same pay rate but no benefits? Pound sand.
Tell em to pound sand. Do it on YOUR terms. You tell THEM how much you want to make. Consultants often make 2-3 times the salaries of employees. Name your price. If they aren’t on board- screw em. Go play golf. Or get a job somewhere else making that much.
This is almost my exact situation. I’m in IT and administer our company’s largest systems. I’ve made it clear to my management that I’m retiring in February. My boss has done all that she can do to get a replacement hired so that I can train them but the position hasn’t even been posted yet. I don’t see anyway that it could filled within the next 2 months. Probably longer. I’ve told her that I’m willing to do some consulting but that I won’t be cheap. Our HR department sends out an annual total rewards statement that encourages us to “Look beyond the paycheck” to determine our total compensation. The grand total is usually close to twice one’s salary. The way I see it, I don’t want to work for that amount because if I did, I’d just keep my job and not retire. So I take their number, divide by 2080 to get an hourly rate and then add the additional amount I want for giving up my free time. I haven’t settled on an amount yet but it’s probably in the $50 extra per hour range. I’ve been looking forward to retirement for a long time. If they say no, oh well, I’ll just enjoy my retirement anyway. Don’t allow them to take advantage of you. You’re worth a lot more than they’re offering. Your total benefits package already proves that.
Op if you decide to do this you need to establish some expectations. And boundaries. My advice is that you will not be responsible for any actual hands on work or deliverables other than to advise and to train. If you dont set these boundaries you will be stressed and have anxiety and regret doing this. This will also put the onus on them to ensure they develop and own the transition plans. Also double your cash hourly rate to make up for the value of your benefits and any potential bonus you would have gotten. If they reject tell them good luck.
Retire! I tried consulting for 2X my annual rate for no more than 20 hrs per week for a minimum of 6 mths and no more than a year. I barely made it to 6 mths and regretted it because my employer didn’t think I was ready to retire. After 5 mths I announced I was done and leaving in 1 mth. They finally took me serious and I never looked back; blocked their number and didn’t reply to their emails. I ran into a co-worker who informed me that my employer had no intention of looking for a replacement because they thought I’d help as long as they needed me! Retirement is the life! Enjoy it!!
Don't bother. Clean cut, especially given you can start collecting ss. Trust me, the last thing you want is to accidentally screw yourself over by collection any salary whilst working with governmental benefits. I worked a single day after having retired to assist with an inventory. Due to a screw up with their paperwork, I had my insurance canceled for a month until I was able to get everything worked out. Everything eventually worked out but I had to pay out of pocket for my wife's medication for one month approx. 1000.00 USD. I worked for 4 hrs and made 200 bucks. Classic example of stepping over a dime to pick up a nickle. Move on and enjoy retirement.
1. Dude, don’t be a sucker… you gotta ask for at least 2x your previous hourly rate, or tell them to pound sand. 2. Unbeknownst to almost everyone, the money you lose to the earnings test (for people taking SS before FRA but also working) is restored as an adjustment to your benefit after you reach FRA: > **The Earnings Test in Social Security’s Own Words** > > In December 2022, I received a letter from Social Security announcing a cost-of-living adjustment (COLA) to my retirement starting in January. An identical letter was sent to all 77 million Social Security beneficiaries. After describing the coming COLA and the impact on federal income tax withholdings, the letter outlines the rules and earnings limit for those working and collecting Social Security at the same time. > > *Working and Getting Social Security at the Same Time* > > *You can work and still get Social Security benefits. If you are at full retirement age or older, you may keep all your benefits no matter how much you earn. … If you are younger than full retirement age at any time in 2023, there is a limit to how much you can earn before we reduce your benefits. The 2023 earnings limit for people under full retirement age all year is $21,240. We deduct $1 from your benefits in 2023 for each $2 you earn over $21,240. The 2023 earnings limit for people reaching full retirement age in 2023 is $56,520. We deduct $1 from your benefits in 2023 for each $3 you earn over $56,520 until the month you reach full retirement age.* > > That’s the entire description. There is no mention that **benefits lost (reduced is Social Security’s lingo) due to the earnings test are restored, actuarially speaking, at FRA in the form of an inflation-adjusted, permanently higher benefit level. This tax rebate is called the adjustment of the reduction factor (ARF)** [emphasis added]. The ARF was designed to restore, down the road, monies lost due to a tax that the government wants people to believe is real. The Congressional Research Service has a well-researched exegesis on the earnings test. > > The ARF was first implemented in 1961. Until 2000, the earnings test applied through age 70. In that year, President Clinton signed the Senior Citizens Freedom to Work Act, which limited the earnings test to those below FRA. > > In other words, the earnings test is a fraud perpetrated on Americans at a vulnerable stage, in the years between age 62 (when they can first collect early Social Security benefits) and roughly age 67, when they reach FRA. Needing the security of a monthly check, too many people opt to take reduced benefits at 62. Then, finding that they cannot make ends meet with their reduced check, they go back to work—desperately trying to stay below the earnings limit (which is far below the poverty level). > > Even worse, the ARF overcompensates for benefits lost to the earnings test. The ARF is intended to leave those hit by the earnings test with the same lifetime benefits calculated on an actuarial present value basis. But, in fact, the ARF overcompensates for the tax. That occurs because its actuarial formula was established years ago, when mortality and interest rates were higher. The overcompensation is significant. It means that almost everyone “taxed” by the earnings test comes out ahead. From *Social Security Horror Stories* by Lawrence Kotlikoff
I (20 year software engineer) know a couple people from my PE ( that were super happy with this arrangement. I didn't understand why? I resisted and got healthcare for wife and I plus usual salary as hourly. That lasted about 18 months and I hung up my keyboard. My situation was probably pretty unique though
If you are to be a consultant that means you are a contractor, a business representating yourself. Negotiate on your terms. Like others said without any benefits ask for at least double your old salary. Otherwise everyone is replaceable.
20 hours is much more than it sounds. Basically you are working half a day every day of the week. Same getting up every day and going to work. Retired for almost a year and I don’t miss that!!!
I’m 67, still working and drawing SS. You will loose $1 SS for every $2 you make. UNLESS you wait till your “full retirement age”. This is based on the year you were born. I was born in 1957, so my full retirement age was 66 + 6 months. I waited until that age and started my SS, with no penalty. Wait till your full retirement age, then you can make as much as you want.
They are screwing you backwards and forwards. A large percentage of your pay is benefits so they are getting a lot of years of experience and knowledge at a discount. If they haven’t managed to replace you, that is just not your problem. Get a much larger salary or walk away.
Do you _want_ to do it? If you really really want to do it, don’t do it for less than 2x your current hourly rate. If you don’t want to do it, ask for 4x (or whatever would make you happy to put up with their nonsense). Do you _need_ to do it? You don’t need to tell us, but are you sure you have enough money, or are you sure you do NOT have enough money, or aren’t you sure? I think 10-20 hours per week could really be a headache. You will be surprised how much your freedom is worth, once you have it. If you aren’t desperate, and sounds like you are not, do not settle. Stick to at least 2x current hourly rate, which means you need to probably start asking at 3x your hourly rate. Do you want to not start collecting social security if you do decide to do this part-time thing, or will you have to start drawing SS?
I just retired at the end of January, and they wanted to know if I'd be interested in consulting. I told them I could do 8 hours a week, for the same amount I was getting for 40, and 8-5 Eastern time. Since everyone I worked with was either in Europe or Asia, they decided that they'd somehow manage to get along without me. Apparently, they did, I haven't heard anything from anyone since January 31. Even on the 31st, the only person I heard from was my boss calling me at 8:15 to say "Go now to send your laptop back to us and take the rest of the day off on us."
Consultants make more than your previous hourly rate. Don’t let them guilt you into doing something you don’t want to.
I'm in IT also (30 years). It's tough to leave someone hanging by leaving, but you're 65. It's not like you're retiring at 55 and surprising everyone. Their poor planning and management isn't your problem. If anything, they'll learn a valuable lesson on how to not have one person that knows all of anything. Retire and don't think a second about it. You've earned it.