6 Reasons to Delay Retirement

One of the first questions we ask clients when creating a financial plan is, “When do you plan to retire?” Surprisingly, many aren’t sure. The decision often is not just about money. Age, health, lifestyle, family and job satisfaction can all be factors in determining whether to delay retirement.

You may be ready to call it quits, but your spouse may think you need to keep working. Or the opposite can occur. Your spouse assumes you are ready to retire so you can spend more time together, but you’re not even close. Even if you want to keep working, you might not have the drive or passion you felt earlier in your career. Or your boss might have his own assumptions about when you’ll retire.

Growing numbers of Americans have been delaying retirement, for many reasons. In 1995, 15 percent of workers planned to retire at age 66 or older. In the Employee Benefit Research Institute’s 2015 Retirement Confidence Survey, 36 percent planned to.

Deciding whether to delay retirement is often very much an economic decision. How much do you have saved? What will your Social Security benefit be? What kind of lifestyle do you need to support in retirement? Do you want to leave a financial legacy?

Here are six reasons people consider delaying retirement:

Bigger nest eggs  For many people, the years leading up to retirement offer great opportunities to save for retirement. Earnings often are the highest of their careers. The children have left home and are financially independent. That extra money can be funneled into higher savings, and working longer provides more years for those savings to grow. Investors age 50 and older can contribute extra money to a 401(k) plan ($6,000 in 2016). That offers even more opportunity to build retirement savings.

Fewer retirement years  Many boomers can expect to spend 20 or more years in retirement. The longer a person works, the fewer years he or she will need to finance without a salary. Delaying retirement also gives you a better chance to maintain your lifestyle once you do retire. It can also mean you'll be more able to afford extras such as travel or a vacation home.

Job satisfaction  Numerous studies have noted that people who enjoy their jobs are less stressed and less lonely than those who don’t. That’s beneficial to mental and physical well-being.

Working has the added benefit of allowing you to keep busy, connected, relevant and remain part of your workplace community. All of those contribute to overall satisfaction.

Even if you can afford to retire, you might want to continue working if you still feel engaged and passionate about your work.

Higher Social Security benefits  Although you can begin claiming Social Security benefits at 62, you can increase your eventual Social Security monthly income significantly by deferring the benefit until you are older.

For example, if your Full Retirement Age will be 66 and your monthly benefit at that age would be $1,000, holding off claiming until age 70 (the latest you can) increases your monthly benefit to $1,320 – a 32 percent increase. In contrast, if you take Social Security at 62, your monthly benefit is reduced to $750.

A delay of even one or two years will increase your monthly Social Security benefit and is worth considering as a hedge against longevity.

Health insurance and benefits  True, the Affordable Care Act provides access to health insurance to most Americans at any age. But continuing to work may give you the opportunity to get health insurance through an employer for less than an individual policy, until you reach 65 and qualify for Medicare. Many employers also offer other types of insurance and benefits contributing to overall wellness and quality of life. They may suggest an advantage to continue working, too.

Making a difference  Although many people delay retirement for financial reasons, a significant segment keep working because they want to stay active and be productive. Many older workers are healthy, engaged and eager to continue working, either in established positions or new ventures and second careers.

Every person must decide on an appropriate retirement date personally after weighing all the key factors. There is no right or wrong answer. It’s a matter of what you believe is best for you.