Delaying Retirement, But Not Your Retirement Dreams
by Christine S. Fahlund
Many investors today who had planned to retire early at 62 when they became eligible for Social Security benefits—albeit at a reduced rate compared with retiring at full retirement age—are discovering that those benefits, combined with their retirement savings, cannot support the lifestyle they expected or provide the financial cushion in retirement they desire.
Often, they are disappointed to realize they may have to continue working and saving for several more years to catch up. This strategy leaves preretirees in transition with a choice: retire early with insufficient savings and income or delay their retirement dreams until after they retire.
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For some preretirees there may be another, more desirable option. An analysis by T. Rowe Price demonstrates that, if those in their early 60s decide to keep working, but discontinue making contributions to their retirement plans—spending that money instead—they can start fulfilling some of their retirement dreams sooner and still be in a stronger financial position down the road.
This new transitional strategy involves working longer, but it can provide more discretionary income during transition years to start seriously pursuing your retirement aspirations well before you thought you could.
And by continuing to work and delaying receipt of Social Security benefits, you are positioning yourself to have potentially higher payments—adjusted annually for inflation—for the rest of your life. This strategy can be much more positive for those in transition.
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Discussion
The only problem with working until 70 is that the expected life span is only 85. 15 years of retirement isn't much and the older you get the less likely your health will allow you to do the things you wanted to do.
posted about 1 year ago by Benny from Mississippi
It also depends on the physical demands of your job. For example, if you are a steel worker your retirement age would be different than if you worked in an office.
posted about 1 year ago by David from Illinois
Great strategy if one is physically able. Warren Buffet is 80 and still going strong. Personally, continuing to add value and the feeling of contributing to society through meaningful work may increase our life expectancy.
posted about 1 year ago by Gary from Minnesota
"Working part time beyond age 62" sounds great until you try to find a part time job that includes health care benefits--even partial benefits. Age 62 to 65 is three scary years.
posted about 1 year ago by Claudia from Oregon
There is far too much emphasis on early retirement by the media ,little of which is of any value .All other things being equal , work until age 67 and keep yourself in good physical shape
posted about 1 year ago by Ray from South Carolina
I like this plan. I am 9 years away from 62 and really don't expect to fully retire, but would like to have more freedom to do things that I am unable to do today because of college and other expenses.
posted about 1 year ago by Tim from Pennsylvania
Life expectancy needs to be factored in to any discussion of retirement. If people knew how much they are reducing their lifetime by smoking, diabetes, high blood pressure, and obesity, maybe they would change their lifestyles. Of course, another factor is being sedentary, so working at a desk and computer can be hazardous to your health! Changing from a desk jockey job to delivering mail or pizzas or the newspaper would be beneficial to your health.
posted about 1 year ago by Randy from Florida
I like the idea, particularly when clients have the emotional roadblock to retirement because their income-producing ability has ceased. If they only spent their discretionary money on doing the things they plan to do in retirement may help them to adjust better to the actual retirement event.
posted about 1 year ago by Nancy from Maryland
I like the idea of staying mentally stimulated which a job sometimes provides. If we look at research about brains, it is important to stay stimulated by relationships for helping with brain health.
So having a lighter work schedule and being able to do more other activities while not using retirement income and funds makes good solid sense to me. One still gets the stimulation from contact with the workplace.
posted about 1 year ago by Barbara from New York
