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Should I Delay Retirement? What the Numbers Say – 2022 Study


Delaying retirement can extend the life of your savings.Delaying retirement is one impactful way to extend the life of your retirement savings. Waiting several years – or decades – to leave the workforce can grow your investment accounts, increase Social Security benefits and reduce the number of years your money needs to last in retirement.

But just how important is delaying retirement to your financial health and longevity? And is retiring early too risky for most savers?

To find out, SmartAsset crunched the numbers to calculate how delaying retirement can help stretch your savings.

If you need help saving for retirement, talk to a financial advisor.

Our Analysis

SmartAsset ran the numbers on three retirement scenarios. These three aspiring retirees have the same amount in their savings accounts at the date they retire. They also experience the same returns on their investment and the same inflation rate.

Where they differ is the age at which they retire.

  • Retiree A leaves the workforce at 55.
  • Retiree B stops working at 65.
  • Retiree C gets his golden watch at 70.

Saving and Investing Patterns

To illustrate these retirees’ saving, spending and investment behaviors, we used data to create an average profile upon which to run the numbers.

Saving: Each retiree has $500,000 in savings for retirement. This is the amount they have on the date they retire, whether they work until 55 or 70.

While we chose this for illustrative purposes, it’s important to note working an extra five, 10 or 15 years can drastically increase the amount in your investment account. You’ll gain time to make additional contributions (and catch-up contributions if you’re eligible) and allow investment returns to grow your account.

Investments: To run these numbers, SmartAsset assumed the account owner doesn’t need to take required minimum distributions (RMDs) and is withdrawing only what he or she needs to live in retirement. We’re also assuming this account is something like a Roth IRA or Roth 401(k) in which no taxes are due upon withdrawal. For the 55-year-old, we assumed that the funds were available, for example, via the rule of 55.

We also considered a retiree who is invested in a diversified fund returning 5% per year.

Spending and Social Security

This is the calculation that makes or breaks the longevity of each retiree’s savings account. That’s due largely to the impact of Social Security benefits on spending.

Spending: We assume the retiree spends $50,595 per year, which means the person starts retirement needing $4,216 per month. That figure is based on the average amount someone between the ages of 65 and 74 spends in retirement, according to a Fidelity analysis of Bureau of Labor Statistics data.

Social Security: We used the Social Security calculator at to estimate how much in benefits each retiree would receive. That’s based on a salary of $100,000 at retirement age. Somebody who retires at age 55 won’t be eligible to receive Social Security until 62, so that delay was factored in. Additionally, folks who work longer may have increased Social Security payments for two reasons:

  • Retirees can increase their monthly payment for every month they delay taking Social Security between full retirement age (FRA) and 70.
  • Social Security benefits are calculated using the 35 highest earning years of a worker’s career, adjusted for inflation. Workers who can increase the number of high-earning, late-career years may see a higher payout as well.

We assume a 2.2% rate of inflation will swell living costs over time.

Running the Numbers

Retiree A: This early retiree exits the workforce with $500,000 in his retirement account. Because he is ineligible for Social Security until age 62, he withdraws $4,216 in its entirety during his first month of retirement (and an inflation-adjusted figure every month thereafter). When he finally is eligible at age 62, he taps Social Security, which reduces his first payment to $2,803.

His savings last 183 months, and he’s out of funds by age 70 1/4.

Retiree B: Retiree B leaves the workforce at the classic retirement age of 65. He’s tapping Social Security instantly, which is based on a final annual salary of $100,000, and his withdrawals start at just $1,709.

His savings last 401 months, and he’s nearly 88 1/2 before the account empties.

Retiree C: This worker delays retirement until age 70 when he enters his golden years with $500,000 in a retirement account. His first withdrawal, taking into account his higher Social Security payout, is $1,205.

The 5% return on his account makes it grow faster than his withdrawals. He doesn’t run out of savings, and in fact, has some money leftover for his heirs.

Should You Retire Early?

The math shows that waiting to retire can boost your Social Security benefits, lower expenses and allow you to fund fewer years on a fixed income.

But ultimately, the decision to retire early – or continue working into your 70s – is a personal one.

Some folks may enter early retirement unwillingly due to health concerns or job loss. Others may want to leave the workforce early, committing to trading a lower-cost lifestyle for a greater number of happy post-work years.

If early retirement is something you’re eyeing, take the time to prepare your expenses – paying down debt, shoring up insurance and reducing unnecessary costs. Consider the robustness of your savings accounts and the impact early retirement will have on Social Security. Discuss the possibility of part-time or consulting work as a way to ramp down employment without exiting the workforce entirely.

Finally, work with a financial advisor to determine what you can afford and make a plan for the future. The years immediately preceding retirement are a key time to work with a financial advisor, consider your investments and time horizon, discuss expenses and determine whether retirement is in reach.

Bottom Line

Retiring early, especially before you’re eligible for Social Security benefits, will erode your savings much faster than waiting until 65 or later. But the decision of when to retire is personal, so consult with a financial advisor beforehand.

Retirement Planning Tips

  • Planning for retirement can feel like solving a complicated puzzle, but you don't have to go at it alone. A financial advisor can help you put the right pieces together by assessing your needs and connecting you with the services that are right for you. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Social Security plays a critical role in the retirement plans of many. By delaying Social Security beyond your full retirement age, you can increase your benefit up to 8% per year until age 70. SmartAsset's Social Security calculator can help you determine the best time to claim your benefits.

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