The benefits of delaying your retirement are more important than ever as we look at what’s happening to our country’s financial situation and the very real financial problems many people are facing or will in the near future. If Social Security is indeed going broke, delaying retirement will be not just an option, but a necessity for a vast number of workers approaching retirement age. There are many more reasons to delay retirement and more benefits to be gained.
Retirement: Why delay it?
Everyone looking ahead to retirement should take into consideration the fact that the amount of Social Security payments will depend on their age when they retire. Earlier retirement results in lower benefits each month. Those who retire at 62 will receive as much as 30% less in benefits than those who work until the full retirement age of 70. (Current discussions on spending cuts in D.C. include upping full retirement age.) There are those who claim that if a worker retires at 62, they collect benefits for a longer period of time, therefore equaling the amount received in the long term.
Senior Magazine Online reports that Social Security benefits are only one of the reasons to extend your working years. Market downturns, fading traditional pension plans, high unemployment numbers and fewer jobs to go around are all valid reasons people are working in their current positions longer – adding years onto careers and jobs in the workplace instead of taking retirement at the earliest age possible.
If you have a nest egg in place and you continue to work, it will keep growing. You may be able to retain your health benefits through your employer if you keep working. Delayed withdrawals from tax-deferred benefit plans keeps money increasing, and it’s tax-free. Beyond those benefits, your Social Security benefits will grow with each passing month you stay employed beyond your full retirement age, barring any restrictions that may apply.
Downsizing: There’s more time to plan this crucial step if you delay retirement
Before you retire, you may want to consider reducing the cost of living, and downsizing may be one of the options to explore. It is never an easy decision to relocate, but many retirees look forward to other living arrangements with less expense and less work. This can be a very real benefit of delaying retirement, giving you more funds to work with after choosing another home, providing adequate time get comfortable in your new location, and getting organized in new surroundings. Making the move prior to retirement and having lots of time to get it all sorted out will definitely be a benefit of having a few extra years of work after the move and avoiding the trauma of a simultaneous retirement and move.
Evaluating: Retirement goals, travel plans, insurance, and the balancing act
Delaying retirement gives you more of everything – money, benefits, and time to plan. One of the most important types of insurance to have that is sometimes not prioritized is long-term care, says Senior Magazine Online. One never knows when a nursing home or long-term care facility may be needed. To be safe and well protected, evaluate your need for this. Also, decide just what you’d like to do with your retirement. If it’s travel, take a realistic look at how much you will need to accomplish it. Check out your portfolio and be sure it’s balanced. It should have a mix of assets, such as cash, bonds, and stocks. A reputable financial advisor can help you understand where you are with your retirement planning, if you’re well setup, if retiring now is right for you, or if delaying retirement looks like the better option.
Working after retirement: Is that a benefit?
It certainly can be, for several reasons. Supplementing your Social Security income each month allows for greater financial freedom. Most retirees look for part-time work with some flexibility. Many folks like the idea of staying involved in a workplace and enjoy the camaraderie and interaction of being part of a work team. Working keeps the mind (and body) flexible so that skills are not lost after an “official” retirement. Delaying retirement by working more years keeps us vital and we tend to feel younger when life follows a routine through the week. We seem to have more purpose.
What about the Baby Boomers?
Many Baby Boomers are looking more realistically at delaying retirement. Alicia Munnell, director of the Center for Retirement Research at Boston College states that “The arguments in favor of working longer are overwhelming. We just need to convince people.” This is true, especially as we see stock markets tumbling and our country’s financial status being downgraded. Baby Boomers who planned to retire at 62 are now rethinking and looking at delaying retirement until age 70. Some, depending on their circumstances, will work even longer.
Check guidelines at Social Security Benefits – Early or Late Retirement? to see what the effects of an early retirement are compared to the benefits of delaying retirement from a financial point of view.