The decision to retire is a pretty big one, and you'll no doubt put a lot of thought into things before ending your career for good. And in the course of contemplating your retirement, you may flip-flop between different ages until you find the right one.
Age 70 is one age you may be considering in the context of your retirement. Working until 70 could benefit you in a couple of really big ways. But there's also a giant pitfall you might encounter if you don't retire until age 70.
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Pro No. 1: You can grow your savings
The longer you work, the more opportunity you have to boost your personal savings. Northwestern Mutual reports that baby boomers have an average retirement savings balance of $120,300. You may have a lot more than that going into retirement. But if your savings aren't so robust, it could definitely pay to work until your 70th birthday and boost your cash reserves as much as you can.
In fact, let's say you're 60 years old with $120,000 in your IRA. You may finally be in a position to max out at $8,000 per year (the current limit for workers 50 and over).
If you do so until age 70, all the while generating a pretty conservative average annual 5% return on your money, you'll end up with about $296,000 in savings. If you only contribute $8,000 a year for another six years to retire at 66, at that same return, you're looking at retiring with $215,000.
Pro No. 2: You can lock in a higher Social Security benefit
You're entitled to your complete monthly Social Security benefit based on your earnings record at full retirement age, which is 66, 67, or somewhere in the middle, depending on your year of birth. But if you delay your filing past full retirement age, your monthly benefit will get an 8% boost for each year you do, up until age 70.
For some people, it is possible to retire without claiming Social Security right away. But if you want the maximum monthly benefit you're personally entitled to, you may want to plan to work until age 70 and then sign up for Social Security at that point in time.
The big con: You might deny yourself more "good years" of retirement
Maybe you'll be blessed with great health all the way into your 80s. Or maybe your health will start to decline around your 70th birthday. Without a crystal ball, it's impossible to know.
However, if you retire at age 70, you could end up in a situation where your health has started to falter by the time your career has ended. That could mean losing out on the opportunity to do some of the things you've always wanted to do as a retiree.
Let's say hiking different trails throughout the country is a big goal of yours. If you're in good shape to do that at age 66, there's no guarantee the same will really hold true four years later. So in this example, waiting until age 70 to retire could mean denying yourself that chance to check a life objective off your list.
Of course, you can use your health as a guidance point when making your decision. If you're still in great shape by the time your mid- or late 60s arrive, you can think about postponing retirement. If you're starting to struggle or lose energy by that point, then you can pull the plug on your career sooner. But either way, do keep in mind that retiring a bit later could put you at risk of missing out on some "good years" of retirement that you may not be able to get back.
All told, retiring at 70 is a mixed bag. Consider the benefits and drawbacks very carefully in the course of making your decision.
