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3 Reasons to Delay Retirement

By Maurie Backman – Mar 13, 2016 at 8:22PM

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And they aren't just financial.


Many people spend years dreaming of retirement, saving aggressively and making fabulous plans for their golden years. But now and then reality comes along and blows those plans to smithereens, forcing people to put off retirement just when they thought they were ready to leave the workforce for good. That's why a recent study by the American Institute of CPAs found that 18% of Americans are delaying retirement for financial reasons.

Of course, there are other factors at play that lead Americans to put off retirement, including increased life expectancies, improved health among older workers, and a growing number of less physically demanding jobs. And while some people have no choice but to delay retirement, even those who aren't in dire financial straits might seriously consider putting it off for a few years.

If you're on the fence about retiring, consider these three key benefits of staying in the workforce just a bit longer.

1. You'll get a chance to sock away extra cash
The longer you work, the more opportunity you'll have to save money. Once you enter retirement and begin living on a fixed income, saving money will get much more difficult, but if you're able to maintain your current salary for a few more years (or, better yet, your current salary plus some annual raises), you'll get a chance to set aside extra cash for when you need it the most. Anyone aged 50 or older is entitled to make catch-up contributions to the tune of $6,000 per year in a 401(k) and $1,000 in an IRA. This means that all in, you can throw $24,000 into a 401(k) and $6,500 into an IRA, which can go a long way once you're out of the workforce for good.

2. You'll get to claim higher Social Security benefits
If you continue earning a salary for a few extra years, then you'll be able to live off your earnings without claiming Social Security -- and that's a good thing, because the Social Security Administration rewards people who hold off on collecting benefits.

Once you reach your full retirement age (which varies depending on when you were born), you're eligible to receive your Social Security benefits in full, but if you wait to start collecting benefits, you'll get even more money per check. For every year you wait past your full retirement age to claim Social Security, you'll get an annual 8% increase in benefits. Your benefits max out at age 70, at which point there are no additional incentives for postponing.

For example, if your monthly benefit at age 66 is $1,200 a month, and you hold off on taking Social Security for a year, you'll increase your benefit to $1,296 per month. Hold off until age 70, and you'll get $1,584, or 132% of your original full benefit, for delaying as long as you possibly can. Also remember that your Social Security benefits are based on your average lifetime earnings, so that's another way that working a few extra years could raise your benefits, especially if you make significantly more money now than you did early on in your career. 

If You Start Getting Benefits at Age ...

Multiply Your Full Retirement Benefit by ...



66 + 6 months




67 + 6 months




68 + 6 months




69 + 6 months


70 or later



3. Working longer might be better for your health
Studies have shown that working longer can be not only financially savvy, but even good for your health. Entering retirement often leads to a decrease in physical and mental exercise, which can take a serious toll on your health. According to a study by the Institute of Economic Affairs, retirement increases the probability of suffering from clinical depression by 40%. Furthermore, it increases the likelihood of having at least one diagnosed physical ailment by 60%.

Working a few extra years could help you maintain your physical, mental, and emotional strength. Remember, an office environment can serve as a social outlet, which is essential at any age. And for some folks, the physical activity involved in their commute or their daily work helps them stay in shape. If you enjoy your job and get satisfaction from doing it, then that's all the more reason to stick with it for as long as you're physically able.

Of course, you may be able to continue working while also enjoying some of the benefits that come with being retired. If, for example, you're looking forward to retirement because it will allow you to spend more time with family, perhaps discuss a reduced work week or a flexible work-from-home arrangement with your employer. If you're hoping to travel while you're still in good enough health to enjoy it, ask your company for a month or two of unpaid leave, rather than giving up your job altogether. Delaying retirement doesn't have to mean missing out on the things that are most important to you at this point in your life, and if you play your cards right, you just might enjoy the best of both worlds.

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