If you’ve dreamed of retirement since entering the workforce, you may have some idea of what it looks like when you’re no longer working. But you may not retire when you thought you would, perhaps due to circumstances beyond your control.
About 40% of workers plan to postpone retirement until later in life because of inflation, according to a recent National Retirement Institute survey. Although life doesn’t always go as planned, future retirees can make the most of a bad situation by delaying their retirement. So if you’re on the fence, here’s why you might want to consider retiring later than you originally thought.
1. You give yourself more time to save and invest
For many retirees, $1 million is the magic retirement savings number, but Americans are nowhere near that number, overall. According to Vanguard’s “How America Saves 2022” report, workers aged 45 to 54 in Vanguard retirement plans had a median of $61,530 at the end of 2021. Those aged 55 to 64 had a median of $89,716 in their plan.
Delaying retirement gives you more time to save for your golden years and less time to live off your savings. Many retirees worry that they’ll run out of money before they die, so the more time you spend saving, the less you’ll depend on those savings when it comes time to stop working.
2. You can delay Social Security for a larger payment
Although you can claim Social Security as early as age 62, the longer you delay deferring it, the more you could possibly claim. Waiting until your full retirement age or until you reach age 70 could significantly increase your benefits. For example, those who reached full retirement age at 67 could increase their monthly benefits by 24% if they waited until age 70.
Delaying Social Security means you’ll have to make up for this potentially lost income. Without a solid nest egg in place, you may have to delay your retirement longer than planned. Continuing to work could be your only or main source of income for a bit longer. In the meantime, however, you’ll be locking in on other Social Security COLA boosts while you’re at it.
3. You love what you do
If you’re happy with your job and happy to work, you don’t have to stop once you hit a magic number. Not everyone loves their job and many look forward to the day when they no longer need to go to the office. But if you’re satisfied, don’t feel like you have to stop.
Besides income, work has many other benefits for emotional, psychological and mental health. Older workers don’t need to stop working at a certain age, especially if they like it.
4. You can capitalize on other benefits
Although income is helpful, a job usually offers other benefits. For example, you might have an employer-matched 401(k). If you are not yet eligible for Medicare, you can count on health care benefits as well. These benefits could be better than what’s offered on ACA healthcare exchanges, or at least for a lot less than you’d pay.
Some workers may receive other benefits, such as reimbursement for continuing education, gym membership, reimbursement for certain bills, etc. If you want to keep some benefits that you can’t get if you quit your job, you might want to stay a little longer.
5. You can wait for inflation
With inflation at its highest in decades, rising costs are hurting everyone, including pre-retirees. Again, with around 40% of respondents postponing retirement due to inflation, according to the recent Nationwide Retirement Institute survey, it may be wise to wait for prices to rise and ensure your finances are secure. stable before proceeding to the next step.
While you wait, use Bankrate’s retirement calculator to figure out how long your money will last.
6. You’re stuck and unable to retire
For many reasons, your original retirement plan may not have worked out the way you thought it would. For example, you may not be able to downsize due to an uncertain housing market. Or you were laid off during the pandemic and had to find a job that wasn’t what you traditionally did for work, so you’re now catching up on lost income and need to keep working.
Maybe you wanted to move to be closer to family, or sudden health issues ate up more of your budget than you expected. Whatever the reason, you may not be able to retire now and may need to reevaluate your plans or consider alternatives, including working longer.
At the end of the line
Retirement is not a single path. If you have to delay your retirement because of something unforeseen or if things haven’t gone as planned, don’t worry. If you feel stuck and can’t see a way out, you may have more options than you think. Take the time to consider your choices now so you can chart a path to retirement in the future. And if you’re looking to avoid this situation in the future, here’s how much you should have saved at each age to stay on track.
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