It’s easy to assume that most people would like to retire early. After all, who doesn’t want more free time without the demands of work? However, the question of when to retire is not as simple as it seems.
More and more people are choosing to delay retirement, and it’s not just about the money. Factors like retirement savings, job satisfaction, age, and benefits have made delayed retirement a practical choice for many.
4 Reasons to Consider Delaying Your Retirement
A lot of people dream of retiring early. Trends like the FIRE movement (Financial Independence, Retire Early) have shown that it’s possible to stop working at a younger age. Proponents of the movement and others like it are retiring as young as 30 and 40 years old instead of the conventional retirement age of 65 and older.
On the other hand, a growing number of Americans are delaying retirement. In 2015, 36% of workers planned to retire at age 66 or older. The number has grown since then.
Still not sure when’s the best time for you to retire? Consider the following reasons for delaying it:
1. Building a bigger nest egg
The years right before retirement offer great savings potential. Thanks to many years of experience, older people tend to earn a lot more by that time.
In addition, their children are already financially stable and have left home, freeing up extra money. This can then be funneled into savings accounts, and working longer means more years of growing those savings.
Investors who are 50 and up can also contribute extra money to their 401(k), allowing them to increase their retirement savings significantly.
2. Enjoying job satisfaction for longer
Some people are simply happy with their jobs, and retirement can actually have a detrimental effect on their mental health. People who enjoy their jobs are less lonely and less stressed than those who don’t.
Working also allows you to stay connected, feel relevant, stay busy, and remain part of a community. Even if you are of retirement age, you may consider delaying it if you still feel passionate and engaged about your job.
3. Financing fewer retirement years
The average retiree spends 20 or more years in retirement, and all of those are spent without a salary. In contrast, the longer you work, the fewer years you’ll need to finance without a steady income.
In addition, delayed retirement also increases your chance to live your dream lifestyle once you do stop working. You’re better able to afford luxuries like a vacation home or traveling.
4. Receiving higher social security benefits
At age 62, you can already begin claiming social security benefits. However, deferring it until you’re older can significantly increase your social security monthly income. For instance, holding off claiming until you’re 70 years old can increase your social security income by at least 32%. Therefore, even a few years of delayed retirement can have a big effect on your financial situation as a retiree.
Ultimately, deciding when to retire is a personal decision. But make sure to think carefully about the timing. Do you have enough savings to live comfortably and securely? Do you have ways to stay productive and mentally-engaged? What kind of lifestyle are you planning to lead? Ask yourself these questions and more to help you choose the right time to retire.