How Long Should You Really Work? 3 Reasons To Delay Your Retirement
Written by
Kerra Bolton
Edited by
Levi Leidy
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Choosing when to retire is a complex decision — one that affects your family, health and retirement savings.
According to data from the Board of Governors of the Federal Reserve System, while 27% of Americans consider themselves retired, 15% continue to work. There are compelling reasons to stay longer, from making the most of your retirement benefits and Social Security payouts to maintaining your health coverage.
How long should you really work? Here are a few reasons you may want to delay your retirement.
More Time To Save
One of the most overlooked ways to strengthen your retirement plan is to stay in the workforce longer. Delaying your retirement allows you to build compound interest, continue contributing to your 401(k) and IRA accounts and grow your savings.
“The longer you work, the more risk you remove from retirement planning…or ‘retirement roulette,'” said Paul Tyler, host of That Annuity Show podcast. “You have more time to save. You can let your nest egg continue to grow without spending valuable principal.”
According to a study by the National Bureau of Economic Research, “Older workers who are 10 years away from retirement and decide to work one month longer at the end of their careers can get the same increase in retirement income as they can by adding one percentage point to their retirement savings rate over 10 years.”
Bigger Social Security Check
Your Social Security benefits increase by as much as 8% annually until you reach 70 for each year you delay claiming Social Security benefits beyond full retirement age (around 67).
National Bureau of Economic Researchers calculated that if an average 66-year-old delays their retirement and Social Security claims for one year, they will see over a 7.7% growth in their retirement income. Of that money, 83% would come from a rise in Social Security benefits.
“The monthly check you will receive from the government for the rest of your life will simply get larger the longer you wait to file,” Tyler said. “Who wouldn’t want that bigger check?”
However, Tyler recommended applying for Social Security at your full retirement age for those who are struggling to pay daily bills or have health concerns.
“Taking a smaller, regular check may remove stress in later years,” Tyler said. “Also, if you are in poor health, it may pay to take something now. However, if you think you will live longer than age 84, waiting until age 70 could be the perfect plan.”
Reducing Healthcare Costs
Our health naturally declines as we age. According to the 2024 Milliman Retiree Health Cost Index, an average 65-year-old couple would need $395,000 in savings earmarked for healthcare costs. The hypothetical couple would need $7,000 more or $8,000 less, depending on what Medicare coverage they had.
“Healthcare will probably be the biggest expense you pay in retirement,” Tyler said. “Staying on an employer’s healthcare plan can remove a huge burden in later years.”
Tyler also said that each spouse can plan to expect to pay around $6,000 a year for Medicare or Medicare Advantage.
“And remember, that doesn’t include large, unexpected medical procedures that often occur later in life.”
Delaying retirement could help you save in healthcare costs by remaining on employer-sponsored health insurance and avoiding buying private insurance before becoming eligible for Medicare at 65.
A Solution? Taking the Gradual Approach
Nevertheless, researchers found that the impact of working past retirement age yielded mixed results.
For example, a cohort study of 65-year-old retirees found that those who worked part time or full time reported significantly better mental health than those who retired. Meanwhile, a U.K. study found that women who worked longer said they had poorer mental health and experienced higher depression than retirees in the same study.
Retiring doesn’t have to be all or nothing. If your wallet and health can handle it, phase out your retirement or take on part-time work. Doing so will still give you more free time while earning income and stretching your retirement savings.
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