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4 Reasons Delaying Retirement Could Be Right For You

As a financial planner, one question I hear over and over again is,

When should I retire?

That is such an excellent question and one on the mind of many pre-retirees, but one that doesn’t have a straightforward answer. Retirement is something that impacts everyone differently, therefore it is crucial that you evaluate your goals, values, and priorities when you make the decision to retire. 

Some people retire early while others never retire. It is all based on your financial and mental approach as well as progress toward retirement. Many people feel apprehensive about retirement and wish to delay it. Delaying retirement has many benefits that could help you reach your goals. Today, I’d like to discuss the top 4 reasons that delaying retirement could benefit you.

1. Time To Pay Off Debt

You don’t want to bring debt with you into your golden years. It can negatively impact your cash flow, assets, and resources that could otherwise help maximize your experience. By delaying retirement, you are able to dedicate more time to pay off your debt, whether that be your mortgage, student loan, car payment, personal loan, credit card, or outstanding expenses.

When you retire, you're cash flow obviously changes - no more paychecks. You may not be bringing in the same amount of money each month as when you were working full time which can put an unnecessary strain on your monthly bills. 

When you have the security of your full-time job, it is important that you make debt repayment a priority. Delaying retirement, if only by a few years, will give you the income you need to be able to dedicate time and energy into paying off your debt. 

2. Increase Your Savings

By delaying retirement, you are able to increase the amount of time you can save. You can boost your retirement savings and personal savings which could provide a more comfortable retirement. Many people need the extra time to save up money, sometimes because saving for retirement has dwindled due to other priorities or commitments, such as medical expenses or help with college for a grandchild. With more time, you will be able to keep adding to your accounts until you are where you want and need to be.

When you retire later, you will also be able to obtain Social Security delayed credits which increase the amount of your monthly benefit. By waiting to retire until at least your full retirement age (67 for those born in 1960 or later), you are guaranteed 100% of your benefit. But if you wait until you are 70 to begin collecting, your monthly benefit will increase by about 25%, adding a significant amount to your monthly income.  This happens because the total amount of money the Social Security Administration has set aside to pay you until you die will, since you waited three years, need to cover a shorter span of time.  If you are curious about life expectancy issues, you can visit this site available from the SSA>

Delaying retirement can also have a huge impact on your medical expenses. Most employers provide their employees with health care options which come at a much more favorable price than obtaining it on your own or enrolling in Medicare. These benefits are a great incentive for pre-retirees to extend their working years. Medical expenses are often the most costly element of your retirement, with many couples spending upwards of $285,000 on medical expenses alone. Maximizing your employer’s health care coverage is a great way to increase your savings. 

3. Prolong Your Career

Many people delay retirement because they don’t want to stop working. You may love what you are doing and don’t want to stop. Or you may be really passionate about pursuing an encore career. For many people, their work brings them joy and a sense of fulfillment, which is why many retirees struggle with these things. Delaying retirement in pursuit of your current or encore career is a great way to maintain fulfillment and spending your time in a meaningful and productive way.

This is a personal decision and one that should be made depending on your lifestyle, values, and priorities. It is important to keep in mind the tax implications of working while being retired such as the income limit if you are working and also collecting Social Security. 

4. It’s All Personal

Retirement is only half about money; the other half is emotion. In addition to asking yourself if you are financially ready to retire ask these questions as well:

  • Are you mentally ready to retire?

  • How will you maintain your mental agility?

  • What does being retired mean for you?

Your retirement, or lack thereof, is all about you. Take the time to evaluate your financial and personal situation to determine the right course of action for you. Here at Pro Wealth Invest, we are passionate about people who love to make a difference. Give us a call today, and we can help you create a plan for the next phase in your life.