Once upon a time you worked at a job for 40 years or so. Then they gave you a cake, a gold watch and a pat on the back and sent you on your way, never to be seen or heard from again. They called it retirement and it usually happened at age 65. It was considered your just reward for a lifetime spent working. You could expect to spend five to seven years reading the newspaper and yelling at the neighbor’s kids to keep off your lawn before you moved on to your final reward. Now that we’ve started living longer and healthier lives, the prospect of being idle for 20 or 30 years is less appealing. There are a number of practical reasons to consider postponing retirement beyond the fear of boredom.
Find out now: How much should I save for retirement?
1. More Time to Save
Whenever you retire, it’s best to have enough savings to last a long time – like to cover you if you live to the age of 95. You might come up short on your savings goal if you got a late start or lost a few years mid-career due to circumstances beyond your control. No matter the reason, postponing retirement a few years can allow you to play catch-up. Because you’re older, chances are your kids are gone and your income is at its peak, which means you’ll be able to save a higher percentage of your salary than you could in earlier years.
2. Higher Social Security Benefit
The full retirement age for Social Security benefits is slowly inching upward. Age 66 is now the full retirement age for folks born between 1943 and 1954 and it will continue its climb until it reaches age 67 for people born in 1960 and later. While full benefits are available at retirement, you can bump up the amount you receive by up to 8 percent a year through age 70, depending on your birth year. The percent increase may make sense if you’re in good health and either plan to continue working or have an alternative source of income to make up for the absence of Social Security payments in your early 60s.
3. Keep Your Benefits
Your employee benefits could be worth up to $10,000 a year or more in insurance coverage and matching 401(k) contributions. Even though Medicare Part A is completely free at retirement (as long as you’ve worked and paid Social Security taxes for at least 10 years), Medicare Parts B and D that cover doctor’s visits and prescription drugs are not. Postponing your retirement will enable you to continue your benefits and further increase your retirement nest egg by banking the savings.
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4. Your Spouse
If your retirement plans include things like travel and other activities that are best shared with a spouse or partner, postponing retirement until your spouse is ready may be right for you. This applies not only to couples that have an age difference of a few years, but also couples where one of you just wants to spend a few more years on the job. Coordinating your retirement plans is a great way to ensure that the experiences you have spent decades looking forward to are fully shared.
5. Bigger Pension
If you are one of the fortunate people whose job comes with a pension plan for putting off retirement, even a couple of years can add up to a substantially larger payout. This is especially true of plans that base your benefit on your last three or five years of income since your tenure likely has you earning more now than in years past.
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