For years, you’ve dreamt of the day you could finally say, “I’m retired.” You may have images of playing golf, kicking back or spending your time mastering a hobby in your head, but you may want to reconsider your timeline for when to retire. While retiring early or “on-time” may sound very appealing, there are several reasons why it may be worth it to work a year or more past your full retirement age.
When deciding when to retire, be sure to consider the impact not having your employer’s benefits will have. The employer-sponsored health insurance coverage you’ve held through your employer may be hard to match once you’ve retired. Access to your employer benefits can be a big reason for working beyond retirement age.
If you haven’t saved enough for retirement or have other debt, working longer may allow you to put more money away. According to Go Banking Rates 2018 Retirement Survey, 42 percent of Americans have saved less than $10,000 for retirement, and the average adults 65 and older spend in retirement is nearly $46,000 a year.
Working an extra year or two can make a big difference in your retirement savings. You’ll also be contributing more to your retirement plan.
If you’re 50 or older, you may be able to make annual catch-up contributions at the end of each calendar year, according to the Internal Revenue Service. Catch-up contributions up to $6,000 may be allowed for 401(k), 403(b), SARSEP and governmental 457(b) plans in 2015-2018.
Delay Social Security
It may seem like a good idea to take your Social Security benefit as soon as possible. However, if you delay taking your Social Security benefit past your full retirement age, it’ll result in a higher monthly benefit.
If you delay the start of your benefits, they will increase 8 percent each year after your full retirement age, up to age 70.¹ As an example, if your benefit at age 62 is $1,275 per month and your expected full retirement benefit at 66 is $1,700 per month, it would increase to $2,244 per month by age 70. That’s 76 percent higher than if benefits would have been started at age 62.
Planning for tomorrow
Whether retirement is right around the corner or five, 10 or 20 years from now, it’s never too late to learn more about how you can maximize your retirement. Connect with your local Farm Bureau agent to learn how you can take charge of your retirement strategy, today!