At some point in your career, you may feel ready to narrow down a specific retirement date. You may, for example, decide at age 57 that based on your current retirement savings balance, you'll be comfortable ending your career at 62.
But it's important to be flexible with those plans, because rushing into retirement at the wrong time is a decision that could hurt you in the long run. And in some cases, working just a bit longer could help you retire more confidently. Here are three signs that you should delay your retirement by a year.
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1. You're still carrying debt
It's not an absolute rule that you have to retire debt-free. But if you're able to, it could make your life less stressful.
When you're on a fixed income of retirement plan withdrawals and Social Security, the more money you have to allocate to debt payments each month, the more squeezed you might feel. So if working another year makes it possible to retire debt-free, it could be worth doing -- especially if the debt is of the high-interest variety, like a credit card balance.
2. The market just took a dip
When you set a retirement date in advance, it's impossible to know what stock market conditions will look like at the time. But if the market takes a dive right as you're planning to retire, and your portfolio has lost value as a result, it could pay to work another year and wait out a recovery.
If you retire right away and are forced to start tapping your portfolio for income, you may end up having to sell investments at a loss or lower price, putting yourself at a higher risk of eventually running out of money. If you wait a year, your investments might come back up in value so that tapping your IRA or 401(k) isn't a problem.
3. You don't yet have a game plan
It's easy to assume ahead of retirement that you'll enjoy having your days to yourself without the stress of a job. But retirement can be quite boring if you end up with too much downtime. And that's not a good feeling, as too much boredom could impact your mental health.
If you don't have any clue as to how you'll spend your time once you retire, then it may be best to keep working while you figure things out. You can spend those 12 months exploring different options, whether it's enrolling in classes, joining local social clubs, or even setting yourself up to consult part-time for extra money and mental stimulation.
Retirement represents a major change -- financially and logistically. There's nothing wrong with planning for a certain retirement date ahead of time. But it's also important to assess the situation once that date arrives. And if you're still carrying debt, dealing with a market downturn, or at a loss for how to fill your days, then delaying retirement a year is worth considering.
