5 Reasons To Delay Your Retirement, According to Experts

Senior couple having a discussion

Jim Cramer recommends delaying your retirement. In an interview with CNBC Make It, the host of CNBC’s “Mad Money,” and one of GOBankingRates’ Top 100 Money Experts, said people who retire too early need more money in savings than they think. Otherwise, Cramer said early retirees may pay for this decision for the rest of their lives.

While many people do want to retire early so they can lead the retirement lifestyle of their dreams, the reality is that this lifestyle is often expensive — and early retirees may even be sidelined by other unpredictable financial hurdles. Those who decide to delay their retirement until age 70 can expect certain benefits in making this decision. Here are five reasons to consider doing so.

Retirees Who Delay Will Receive the Maximum Social Security Payout

If a retiree chooses to wait until age 70 to retire, they will receive the maximum payment available through Social Security

One of the most persistent myths surrounding retirement is retirees can live off Social Security. This is not true. Social Security is not designed to act as the sole source of income for individuals entering retirement.

Those who decide to delay their retirement will not only be able to receive the maximum payment available, but they can continue using their working years to keep saving. This includes the opportunity to max out contributions on employer-sponsored retirement plans and diversify retirement income buckets. This is especially helpful for retirees who do not have enough in savings and need extra time to financially catch up.

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“Delaying your retirement by a few years can be powerful,” said Sri Reddy, SVP of retirement and income solutions at Principal Financial Group. “A delay reduces your amount of necessary retirement income, and increases years to further save.”

A Delay Means Receiving Healthcare Coverage

Skip Skolnik, senior planner and founder of Skolnik Retirement Solutions, does not recommend retiring without health insurance. Most Americans need to work to at least age 65 when they qualify for Medicare. 

While Americans can start claiming Social Security benefits at age 62, it is a good idea to wait until age 65 — if you can’t quite make it to age 70 — before deciding to retire to ensure you receive Medicare coverage.

Your Annual Income Will Increase

Those who continue working until age 70 will enjoy a steady paycheck and maybe even a merit increase from their employer along the way. The eight years spent working between age 62 and age 70 gives all workers the chance to increase their annual income before they retire. And the percentage of that increase can make a huge difference in being able to achieve your desired retirement lifestyle.

“By delaying Social Security, your annual income can increase up to 8% per year for the rest of your life — compounded,” said Skolnik. “For example, postponing Social Security from age 62 until age 70 can result in a 77% increase in annual income for the rest of your life.”

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Life Expectancies Are Increasing

Age plays a pivotal role in your decision to retire, beyond reaching an eligible place for healthcare or a larger Social Security payout.

Gabe Krajicek, CEO of Kasasa, said age must be taken into consideration, especially those who decide to retire early. If you want to retire early, you will need to align these plans with a larger retirement fund. 

“Life expectancies are increasing, meaning retirement savings need to increase,” said Krajicek. “Consider where you expect to be 10 years from now and make sure your retirement savings align.”

A Delay Might Be Best for Your Comfort Level

Not everyone lives in anticipation of retirement. Many soon-to-be retirees, especially those who established a reputation in their industry as hard workers and thought leaders, may fear the idea of losing that identity. There have even been stories of retirees who “un-retire” and get back into the workforce because they genuinely enjoy their careers.

While there are several good reasons to delay your retirement, this decision is a personal one. Take a moment to review your given financial situation and what your financial comfort levels look like with the help of a financial advisor or another financial professional. Track whether you might be able to retire early, or if a delay is necessary to ensure you are retiring when it is right for you.

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