Preparing for retirement can be daunting, particularly if you're nearing retirement age and your savings are falling short. You'll likely need several hundred thousand dollars (if not more than $1 million) to enjoy retirement comfortably, and that's a challenging goal to achieve.
As a result, many older workers are choosing to put off retirement to give themselves more time to save. In fact, a whopping 68% of baby boomers say they plan to continue working past age 65 or never retire at all, according to a recent report from the Transamerica Center for Retirement Studies.
In theory, working longer sounds like a wise idea. However, in some cases, this decision could potentially put your retirement in jeopardy.
The major risk of delaying retirement
Working a few years longer than you'd planned (or skipping retirement altogether) can be a good way to ensure you don't outlive your savings. However, this plan assumes you'll be able to continue working for as long as you'd like, which is a luxury not everyone has.
Nearly 40% of current retirees retired earlier than they'd planned, a survey from the Aegon Center for Longevity and Retirement found. Two of the primary reasons for early retirement, according to the survey, were health issues and unexpected job loss.
Furthermore, many older workers haven't planned for how they expect to continue working later in life. The Transamerica survey found that one-quarter of workers aren't taking any steps to ensure they can keep working during their senior years, such as taking care of their health, performing well at their job, and networking.
This disconnect can potentially throw off your retirement plans. If your retirement strategy is to keep working as long as possible, make sure you're taking steps to ensure that's an option as you get older. If you develop health issues or lose your job and can't find another one, you may be forced to retire whether you're financially prepared for it or not.
Preparing for the unexpected
Of course, it's difficult to prepare for retirement when you don't know exactly what the future holds. It's possible you'll be able to work until you're 100 years old, or you could be forced to retire in your 50s. Because you don't know exactly how your senior years will play out, it's a good idea to hope for the best but plan for the worst.
Even if you're in the best shape of your life right now, keep taking care of your health so there's less of a chance of developing health issues that could derail your career. In addition, keep up to date with your industry and continue networking with new people. If you do lose your job, it will be easier to find another one if you have a current network of contacts you can reach out to.
It's also a good idea to save as much as you can right now, even if you plan to extend your career or never retire at all. Retirement can be incredibly expensive, so it's next to impossible to build a robust retirement fund at the last minute. By boosting your savings now, you'll have a cushion to fall back on if you end up retiring sooner than you'd planned.
Finally, consider how Social Security benefits will factor into your retirement plan. How much you receive each month depends on the age you begin claiming, and if you wait until age 70 to file for benefits, you'll receive your maximum monthly benefit amount. If you were already planning on working until age 70 or beyond, delaying benefits might be a no-brainer. But even if you end up retiring before your 70th birthday, it could be a smart idea to hold off on claiming benefits so you can earn those bigger checks -- especially if you don't have as much saved as you'd like.
Continuing your career and delaying retirement can often be a smart move, particularly if you're struggling to save. However, it's important to be prepared just in case your strategy doesn't go according to plan.