Many workers dream of retiring early, and there are certainly benefits to going that route. When you leave the workforce ahead of your peers, you get an extra opportunity to enjoy your freedom while you're relatively young, as opposed to having to wait until your late 60s or even 70s to have the open schedule you might be craving.

Early retirement, however, isn't always the right choice. In fact, in many cases, it actually pays to do the opposite -- postpone retirement and extend your career. Here are a few reasons to go that route.

1. You don't have enough savings to cover your basic living expenses

This one's pretty much a no-brainer. If you don't have the savings on hand to pay for your essential expenses in retirement, you shouldn't pull the trigger just yet. Rather, you should keep working to boost your savings before cutting ties with your paycheck.

Older man on a couch holding a document and using a calculator, with a laptop in front of him


To figure out where you stand in terms of savings, you can use what's known as the 4% rule. The rule states that if you start by withdrawing 4% of your nest egg during your first year of retirement, and then adjust subsequent withdrawals for inflation, your savings should last 30 years. It's not a perfect rule, but you can use it to assess your savings.

Here's how: Estimate your annual expenses in retirement and then figure out how much Social Security income you're entitled to (which you can find out by accessing your account on the Social Security Administration website). The difference represents how much money you need from savings each year. For example, if you need $50,000 a year to pay your bills, and $20,000 will come from Social Security, your savings will need to provide $30,000. Multiply $30,000 by 25 as per the 4% rule, and you get $750,000. That's how much your nest egg should contain for you to feel ready financially to retire. If you're sitting on $500,000, it's a sign that you need to hold off on retirement and save some more.

2. You've saved enough to cover the basics, but not leisure

Maybe you have enough money to pay your essential living expenses, like rent, electricity, and food, but there's little to nothing left over for activities and travel. If that's the case, postponing retirement might be the right choice. The last thing you want is to leave your job, only to find that you can't afford to do any of the things you've always dreamed of. You're better off padding your nest egg and retiring at a time when you have the option to join a country club, see plays, or do whatever is it will make you enjoy that period of life.

3. You're still in debt

Entering retirement without debt is a far better alternative to carrying debt with you. The reason? Once you move over to a fixed income, you don't want debt payments of any kind monopolizing a chunk of your available cash. Therefore, if you still have student loans, a mortgage, or credit card debt, you'd be wise to work longer and use your extra earnings to pay those things off before calling it quits. This especially holds true if your debt is of the credit card variety, since it's among the least healthy kind to have.

4. You love your job

The good thing about having a job is that it's a fairly inexpensive activity. Other than your commuting costs and other incidentals (think dry cleaning and the like), you're not going to spend nearly as much money working as you will keeping yourself occupied on a full-time basis. Therefore, if you actually like going to work, it pays to do it a few more years, save extra money, and use that cash for more important purposes.

Another thing -- work serves as a social outlet for many people. If that's your situation, you might maintain it a bit longer, even if you technically don't need the money.

5. You don't know what you'll do with your time in retirement

There's a reason retirees are 40% more likely to suffer from depression than workers -- too much free time can lead to boredom and feelings of worthlessness. Therefore, if you have no idea what you'll do with your newfound free time once you stop working, you might be better off postponing retirement until you have a more solid idea. Along these lines, if your spouse isn't ready to retire, and you don't have many (or any) retired friends, you might hold off until you have some clear company to spend your days with. Otherwise, your outlook might take a turn for the worse, and your physical health might quickly follow suit.

While working longer isn't appealing to everyone, in some cases, it definitely makes sense. Be sure the time is right before you retire so that you don't end up regretting the decision after the fact.