Delaying retirement is definitely worth it for these 6 advantages
Retiring as early as possible can seem like an attractive prospect if you can’t wait to spend your days on the golf course, spoil your grandchildren, or travel the world. But while there are benefits to leaving work when you’re as young as possible, there are also big benefits to waiting longer to start your quiet life as a retiree.
In fact, there are actually six major benefits of postponing retirement that are worth considering.
1. You can increase your social security benefits
One of the best reasons to delay retirement is to get a larger Social Security benefit.
You see, for most people, retiring is not possible without claiming Social Security. The problem is, every time you apply for benefits before age 70, you are reducing your checks below your maximum possible benefit.
Each retiree has a full retirement age (FRA) when they are entitled to their standard benefit. For those who claim before the FRA, their standard benefit will be reduced by early deposit penalties. But even waiting until you reach that milestone is not enough to get the biggest monthly check possible. To do this, you will have to wait up to 70 years to maximize your deferred retirement credits.
If you are not yet 70, delay Social Security until you do could help protect yourself from financial hardship later in life by making sure you have more money. And since the last surviving spouse gets survivor benefits equal to the greater of the two benefits each partner received, waiting until age 70 also helps protect your widow (widow) if you were the biggest earner. Getting more monthly Social Security money for yourself and your spouse may be worth staying in the workforce a little longer.
2. You can save more
Retirees usually stop investing for their future and start withdrawing from retirement savings accounts after they leave work. So if you choose to stay at work a little longer, you can keep increasing your savings account balance rather than decreasing it. In fact, once you hit the age of 50, you really have a chance to overfill your savings, since you become eligible for remedial contributions that allow you to make larger tax-deductible contributions to 401 (k) s, IRAs, and HSAs.
3. You won’t have to rely on your savings for that long
Postponing retirement also means less time to depend on your savings, since you can live a little longer on your paycheck instead of starting to draw on your accounts. The more you need your savings to support yourself, the more likely you are to run out of funds before your retirement ends.
4. You can continue to rely on your employer’s insurance
One of the biggest costs retirees face – and paying your medical bills when you retire before you become eligible for Medicare can be particularly tedious. This is because you may have to pay hefty fees for COBRA coverage if you continue to underwrite your employer’s policy, or you may get stuck in purchasing individual coverage – which often comes with higher premiums and deductibles.
If you delay your retirement, you should be able to stay on your employer’s policy longer and take advantage of all of the premium grants your business offers. Estimates of the cost of health care in retirement are also high like $ 325,000 out of pocket for a senior couple in 2020 anything you can do to cut down on that huge expense is probably worth it.
5. You may become eligible for more pension money if your employer provides it
If you receive a traditional pension from your employer, chances are good that the number of years of work is a major determining factor in the size of your pension checks. Retirement benefits are an extremely valuable source of retirement income when guaranteed for life. So it makes sense to take action to get the biggest checks from your employer.
6. You can stay active and engaged longer
Working gives you structure to your day and social relationships. Many retirees struggle to find the same goal after leaving the workforce. It can cause depression and other health problems. If you delay retirement, you can avoid this by getting the physical and mental benefits that the job provides for a longer period.
Of course, none of this means it makes sense to everyone to stay at work longer than expected. If you have enough money saved and are ready to stop working, the benefits of retiring as early as possible can outweigh the disadvantages. Or if your job is jeopardizing your health, you may be ready to take a financial hit to get out of it. The key is not to be so focused on early retirement that you lose sight of the benefits of deferral. By considering these benefits, you can make an informed choice and do what’s best for your situation.