Nearing the traditional retirement age? Perhaps you think you have plenty saved up to spend in the next two decades and enjoy a leisure-filled retirement.
You might have adequate finances as of today, but it is always wise to save till age allows to protect against unpleasant surprises in future.
Here are seven reasons to push back retirement.
1. Bigger Savings
The longer you work, the more you can save for the golden years ahead.
Delaying retirement by just a few years can make all the difference, as the years preceding it is the best time to boost savings. The reason is that by this age your children are financially independent. Also at that age, you tend to earn the highest, having wealth of expertise and experience behind you.
Then, you have more time to fund your retirement investment through saving accounts like 401(k) or IRA.
2. Fewer Retirement Years to Sustain
Many healthy Americans can expect to live at least 20 years post retirement.
A study recently done by the Employee Benefit Research Institute claims that most Americans, including those in the higher-income category, are likely to fall short of money 10 or 20 years after retirement.
Considering this, delaying retirement will lead to fewer years without regular income from work, meaning baby boomers can comfortably draw down on their saving without the fear of outliving their portfolio.
3. More Time to Pay Off Debts
If you are saddled with debts like mortgage default, etc., delaying retirement will give you more years to clear debts so that there are no liabilities once you are ready for the "holiday of a lifetime."
4. Defer Taxes
Postponing retirement will not only help you save more but also delay taxes.
With 401(k), a retirement saving account, you can delay paying taxes on savings until they are withdrawn during retirement, when the income tax is likely to be less.
5. More Social Security Benefits
Did you know that with every month you delay retirement, the Social Security benefits increase by a certain percentage?
“A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent,” claims the government's Web site on Social Security.
Though these benefits do not apply after 70, you can reap in maximum by delaying retirement between ages 62 to 70.
To known more on how retirement age affects Social Security, check Social Security Benefits: Early or Late Retirement?
6. Health Insurance Benefits
Following early retirement, finding affordable health insurance coverage to cover doctor bills and other medical costs can be extremely difficult. Also, you cannot sign up for Medicare before age 65.
In such a scenario, sticking to the job or moving to part-time work at least till age 65 is the most effective way to cover medical bills through insurance provided by the employer.
7. Happier and Healthier Life
Though many believe that retirement is the time to live unfulfilled dreams of their youth, hitting retirement is not as rosy.
In fact, a study done by University of Maryland on 12,000 workers, ages 51 to 61, found that people who downshifted from full-time to part-time job were happier and healthier and reported less problems like heart disease and depression than those who completely left work.