Please ensure Javascript is enabled for purposes of website accessibility

18% of Baby Boomers and Gen Xers Plan to Work Longer. Here's Why You Should Do the Same

By Maurie Backman – Jun 15, 2019 at 6:38AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's hard to argue with these benefits of extending your career.

Many Americans dream of retiring early and enjoying the laid-back, carefree lifestyle that often comes with it. But not everyone wants to escape the workforce as soon as possible. In fact, 18% of both baby boomers and Gen Xers expect to work past age 74, according to Northwestern Mutual's 2019 Planning & Progress Study. If you're convinced you want to leave your career behind at an early age, here are a few reasons to rethink that plan.

1. You'll grow your savings

The more money you accumulate in your nest egg, the more financial security you'll buy yourself during your golden years. But a large number of middle-aged and older workers are sorely lacking in this regard. An alarming 17% of baby boomers have less than $5,000 saved for retirement, according to the aforementioned study, while 21% of Gen Xers have less than $5,000 saved for that purpose. Working longer will therefore afford you the option to boost your nest egg, all the while leaving your existing savings untouched for longer.

Older man at laptop with eyeglasses in hand


Imagine you're sitting on a mere $2,000 for retirement come age 65. If you were to extend your career until age 75 and save $1,000 a month during that period, you'd wind up with $154,000 if you were to also invest your savings at a relatively conservative average annual 5% return. And having that money could, in turn, eliminate some of the financial stress you might otherwise experience once you stop collecting a paycheck from a job.

2. You'll get a chance to boost your Social Security benefits

If you're approaching retirement without much savings, you'll probably end up relying heavily on Social Security during your golden years. And while those benefits were never designed to sustain retirees in the absence of additional income, if that's the situation you're in, it pays to boost them as much as you can. One way to do so is to hold off on filing for as long as possible -- until age 70. Doing so will allow you to accrue delayed retirement credits that increase your benefits by 8% a year.

Let's say you're entitled to a monthly benefit of $1,500 at a full retirement age of 67 based on your earnings history. Working until age 70, and therefore delaying your filing that long, will grow your monthly benefits to $1,860, and that increase will then remain in effect for the rest of your life.

3. You'll avoid boredom

Retirees are 40% more likely than workers to be diagnosed with depression, and much of that boils down to the boredom factor. Older Americans without jobs often struggle to fill their days, and if you don't have a ton of savings to pay for entertainment, you might quickly grow restless once your career comes to a close. A better bet, therefore, may be to extend your working years, especially if you enjoy your job and it serves as a social outlet for you.

Many people resist the idea of working longer due to fears of limiting their retirement to a few short years. But remember, people are living longer these days. The Social Security Administration estimates that one out of every three 65-year-olds today will live past the age of 90, while roughly one in seven will live past age 95. Therefore, extending your career won't necessarily mean that you'll lose out on the chance to enjoy retirement and do the things you've always wanted to do, so if your finances and mental state stand to benefit from delaying that milestone, it pays to consider it.

The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.