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5 Benefits of Delaying Retirement

By Christy Bieber – Jan 11, 2022 at 5:00AM

Key Points

  • The age when you retire could affect when you claim Social Security.
  • It could also impact the amount of money you have saved.
  • You could end up with a lot more money if you delay a little bit before leaving the workforce.

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Waiting a little longer could make a big impact on your financial security in your later years.

Delaying retirement can be a major sacrifice, especially if you're eager to leave behind the working world and start enjoying a life of leisure as a senior. But it's also a sacrifice worth making in many cases.

There are five huge benefits of putting off your departure from your job, all of which should be carefully considered before you decide to give notice. 

Two adults looking at financial paperwork with advisor.

Image source: Getty Images.

1. You can make a delayed Social Security claim

The longer you wait to start your Social Security checks, the higher they'll be -- up until age 70. Claiming at your full retirement age (FRA) -- which is between 66 and four months and 67 depending when you were born -- can result in up to a 30% increase in benefits compared with starting checks at 62. And for each year you delay claiming benefits beyond FRA, you'll get an additional 8% benefits bump until age 70.

You don't necessarily have to delay retirement to put off making a Social Security claim. You could choose to leave the workforce without claiming your benefits -- but only if you have plenty of money saved to cover all your expenses during the years you aren't getting either a paycheck or a Social Security check. 

2. You can save for longer

Working longer gives you more time to earn income and invest in tax-advantaged retirement plans such as a 401(k) or IRA.

You can grow your nest egg for more years with help from Uncle Sam and from your employer if you get a 401(k) match. The more years you invest, the more wealth you can build to live on later in life. 

3. You can continue getting employment benefits 

Chances are good your employer provides more than just a salary. You may have health insurance through your company, as well as other benefits such as the above-mentioned 401(k) match. Some people even get perks such as paid gym memberships, student loan reimbursement assistance, or access to company cars.

If you get any of these generous benefits, it may make sense to work a little longer to keep taking advantage of them. Once you quit, you may find that health insurance is expensive and not as comprehensive as your employer plan -- and that you end up spending a lot of money to replace other benefits your company may have offered.

4. You may become eligible for a larger pension

Many employers pay a pension that's based on your years of service and salary.

If you work longer, you can raise the amount of income that pension provides by putting in more years. If you've moved up the ladder and get raises each year you work, you'll also boost the amount of your pension by staying on the job for more years at your higher pay rate later in your career. 

5. You won't need to rely on savings as long

Finally, if you put off retiring, you don't need to start withdrawing from your investment account as soon. The longer you wait to begin making withdrawals, the less chance there is of running short late in life, since they'll be fewer years your savings needs to support you. 

Each of these five reasons can, by itself, be solid justification for working a few extra years longer than anticipated. Together, they show just how financially beneficial a delayed retirement can be.

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