I met a friend last week for breakfast who's a bit older than I am, and our conversation largely revolved around his upcoming retirement. Late last year, he was convinced that 2026 was when he'd tender his resignation at work for good. Now, he's looking at retiring in 2027 instead, assuming he isn't forced out of his job sooner.
The main reason for his change of heart? Higher costs.
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A lot of people have been grappling with larger bills because of stubborn inflation. And it made my friend realize that having a slightly larger cushion could help him retire more confidently.
Once you get your mind set on a certain retirement age, it can be difficult to alter those plans. But here are a few ways you might benefit from delaying your retirement by a single year.
1. You can boost your savings
My friend has a pretty decent-sized nest egg. But is he retiring with millions of dollars? That's a no.
Even though he plans to live modestly as he does now, my friend realized that working an extra year could give his 401(k) plan a sizable bump. That's due to being able to make catch-up contributions coupled with his fairly generous workplace match. You may find that working 12 extra months allows you to grow your savings nicely, too.
2. You can preserve the savings you've built
Working an extra 12 months may not result in such a substantial IRA or 401(k) boost. But even if that's the case, waiting to retire makes it possible to preserve the savings you already have.
My friend has about $1 million socked away for retirement, which is a decent sum but frankly not a ton. Leaving that sum alone for an extra year gives him more peace of mind.
3. You can grow your Social Security benefits
Once you turn 62, you can claim Social Security at any age. But every year you wait, up until age 70, results in larger monthly checks on a permanent basis.
My friend expects to get a good chunk of his retirement income from Social Security. If he retires this year and claims Social Security right away, he'll be too young to get his benefits without a reduction, since he's turning 65 and his full retirement age is 67.
If he waits even one more year, he'll have larger monthly checks to spend in retirement. And if he waits until 67, which he's strongly considering doing even if retires at 66, that gives him even more financial breathing room.
It pays to be flexible
It can be difficult to push yourself to work longer when you're ready to be done with that stage of life. But in some cases, delaying retirement by a year could help your finances tremendously.
So if you can't wrap your head around the idea of delaying retirement by three or four years, consider waiting 12 months. You may find that it's a reasonable compromise that does you a world of good.
