When we think about retirement, there are different ages that come to mind. Age 62, for example, is the earliest possible age to sign up for Social Security, while age 65 is when Medicare benefits kick in. And then there's age 67, which is full retirement age for Social Security purposes for anyone born in 1960 or later. Full retirement age is when you're entitled to collect your full monthly Social Security benefit, based on your earnings history, without a reduction (whereas filing at 62 will slash that benefit substantially).
On the other hand, 70 isn't necessarily the most popular age to retire. Retiring at 70 means having to work longer and potentially being in less optimal health by the time that next stage of life begins. But in spite of that, here are a few good reasons why retiring at 70 makes a lot of sense today.
1. You'll snag a higher Social Security benefit
Just as filing for benefits before your full retirement age will lower the amount of money you get to collect each month, delaying benefits past full retirement age will give you a higher benefit. In fact, if you're entitled to $1,500 a month at a full retirement age of 67, delaying your filing until age 70 will boost that number by 24%, leaving you with $1,860 a month on a permanent basis. In fact, 70 is the latest age to accrue delayed retirement credits that raise your Social Security benefits, so it pays to look at retiring at that point, once you've done all you can to ensure that this specific income stream is as high as possible.
2. You'll have an opportunity to boost your savings
Once you turn 50, you're allowed to start putting more money into your IRA or 401(k) plan. In the case of the former, annual contribution limits rise by $1,000, and for the latter, they increase by $6,500, which makes a big difference. The only problem is that you may not be in a strong position to take advantage of these higher limits during your 50s. If you have kids going to college at that point, a mortgage you're trying to keep up with, and home repairs that are now starting to pop up as your property ages, you may have a hard time boosting your savings rate until you get into your 60s. That's why it could pay to keep working until the age of 70. It'll give you a few extra years to boost your savings and help ensure that you have enough money to live comfortably once the paycheck you've always relied on goes away.
3. You may have a longer retirement to finance than expected
In 2019, the average U.S. life expectancy rose from 78.7 to 78.8. That may not seem like a significant difference, but what you should know is that life expectancies have been increasing over time, and if your health is great as your career winds down, you may have a very long retirement to pay for. Obviously, that's a good thing on the one hand, but it also means you'll need extra money to cover your ongoing expenses. If you retire at 70, you'll have an opportunity to not only boost your Social Security benefits and retirement savings, but also, leave your existing savings intact a few more years. That could, in turn, ease a lot of financial pressure later on in life.
Some people can't wait to leave their careers behind and enter retirement. But if you're able to keep working until the age of 70, it could make your senior years easier to manage, financially speaking. Think about what you stand to gain by working until 70. You may find that it's a smart age for you to call it quits.