Should You Wait Until Age 70 to Retire?

Full retirement age is now 66 or 67, depending on the year you were born. But a recent survey revealed that one in four workers don’t plan to retire until after their 70th birthday. While some people may choose to work longer out of a desire to stay active, others may have to do so in order to keep up with their expenses. If you’re thinking about putting off your retirement, here’s a look at some of the pros and cons of working until age 70.

Find out now: How much do I need to save for retirement?

Pro: Working Longer May Be Good for Your Health

Getting older takes a toll on you physically. But according to one study, working longer could extend your life span. Researchers at Oregon State University found that putting retirement off for just one year after turning 65 could reduce the risk of dying by 11%.

Sticking with the 9-to-5 until age 70 doesn’t mean you’ll live forever. But it could give you more time to enjoy your golden years.

Pro: You Can Squeeze More Money Out of Social Security

With Social Security, you can get more bang for your buck by waiting until age 70 to begin drawing your benefits. If your normal retirement age is 66 but you wait until you turn 70 to start taking your Social Security benefits, you could receive 132% of the monthly amount you’re eligible for. That’s a nice financial incentive for working a little longer.

Related Article: Social Security Retirement Benefits

Pro: You Can Continue Growing Your Nest Egg

Working until age 70 could be a smart move if you want to add more money to your retirement fund. If you have a 401(k), for example, you could continue making contributions up to the annual limit, along with catch-up contributions while you’re employed. You could also defer triggering required minimum distributions from an employer-sponsored plan.

If you’ve got a traditional IRA, you can make new contributions until age 70 1/2. At that point, the required minimum distribution rule would kick in. With a Roth IRA, however, you have the advantage of being able to save indefinitely.

Con: Your Savings May Still Come Up Short

Continuing to earn a paycheck may help you out if you want to save more for retirement. But it may not do you any good if you end up having to spend a lot of money to counter a rising cost of living. Healthcare expenses in particular can take a big bite out of your savings.

The Bureau of Labor Statistics estimates that the average 65 to 74-year-old spends 12.2% of their income on healthcare each year. By the time they turn 75, medical expenses eat up nearly 16% of their income. At the same time, housing costs also creep up, moving from 32.4% of income in the late 60s and early 70s to almost 37% by age 75 and beyond.

Working longer also doesn’t counter the effects of inflation. When inflation rises, it has the ability to significantly erode retirement savings. According to one report, retirees can lose as much as $94,770 over the course of a 20-year period if the annual inflation rate is 2.5%.

Check out our inflation calculator.

The Bottom Line

If you’re on the fence about whether you should work until you turn 70, weighing the advantages and disadvantages of delaying your retirement can guide you toward making the decision that’s best for you. Remember that while having extra income can certainly be helpful, you’ll have less time to enjoy your retirement.

Tips for Getting Retirement Ready

Figure out how much you’ll need to save to retire comfortably. An easy way to get ahead on saving for retirement is by taking advantage of employer 401(k) matching.
Work with a financial advisor. According to industry experts, people who work with a financial advisor are twice as likely to be on track to meet their retirement goals. A matching tool like SmartAsset’s SmartAdvisor can help you find a person to work with to meet your needs. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to up to three registered investment advisors who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.