Why work as long as possible may not be a safe bet for retirement

Employees are saving more than ever, with an average contribution of $ 2,370 in the first quarter of 2019 for the first quarter of 2019, according to a new study by Fidelity Investments – a 15% increase over last year.

While this is good news, the bad news is that these savings may not be enough to take a comfortable retirement. The researchers also found that the average baby boomer balance was about $ 357,000. This may sound like a solid figure, but when you withdraw tens of thousands of dollars every year in retirement, it only lasts a decade or so.

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "If your savings are downyou have two options: save more now or work a few more years to give yourself more time to keep saving. For those who are already overworked financially, the first option may not be realistic. In this case, they may decide to work as long as they can to build a more robust retirement fund. "Data-reactid =" 13 "> If your savings are insufficient, you have two options: save more now or work a few more years to give you more time to continue saving For those who are already overworked financially the first option may not be realistic, in which case they may decide to work as long as they can to build a stronger pension fund.

At first glance, this seems like a sensible decision – and it is to a certain extent. But it's not without drawbacks.

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Source of the image: Getty Images.

The dangers of planning a delayed retirement

There is nothing wrong with working as long as you can. In fact, if your savings do not match your expectations, it's a good idea to delay your retirement. The problem arises when you risk being forced to take early retirement.

More than a third of workers said they planned to retire at age 70 or older, according to a recent report from the Employee Benefits Research Institute. However, the survey also found that the median age of retirement was 62 and 43% of retirees said they ended up retiring earlier than expected, mainly because of health problems or loss. of their job.

In addition, nearly 8 out of 10 workers reported that they intended to work at some level during retirement, but only a quarter of retirees actually did. In other words, not only do workers retire earlier than expected (they are missing potential years of savings), but they also earn less than expected in retirement.

If you base your retirement plan on your ability to work up to 70, you risk a rude awakening if you are forced to retire sooner than expected. Retiring a few years in advance may not seem like a big deal, but there are two major disadvantages: first, you lose more time saving, and secondly, you spend more time in retirement, so you will need of even more money than you had planned to last the rest of your life. And if you spend $ 30,000 a year in retirement, retiring even five years earlier can cost $ 150,000 more than you expected.

This does not mean that you should not delay your retirement if you run out of savings. But it is important to have a backup plan in case your retirement does not go exactly as planned.

Use social security to your advantage

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "While you are ideally should not rely on social security benefits& nbsp; for most of your retirement income, they can change the game if your personal savings do not reduce it. That said, choosing the right time to claim Social Security can have a positive impact on its effectiveness. "Data-reactid =" 34 "> If, ideally, you should not rely on Social Security benefits for the bulk of your retirement income, they can: change the situation if your personal savings do not reduce it. says, choosing the right time to claim a social security contribution can have a positive impact on its effectiveness.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "A major factor determining the amount you will receive Each month corresponds at the age at which you start to claim benefits.You can start claiming them as early as age 62, but if you do, your benefits will be reduced by up to 30%. the total amount you are theoretically entitled to each month, you will have to wait until you reach your full retirement age (FRA)who is between 66 and 67 depending on the year of your birth. If you delay claiming until the end of your FRA (up to 70 years old), you will receive a bonus of up to 32% of the total amount. "Data-reactid =" 35 "> A determining factor for the amount of your You receive each month the age at which you start to claim benefits.You can start claiming them at the age of 62, but if you do, your benefits will be reduced by 30% In principle, each month, you must wait until you reach your retirement age, between 66 and 67, depending on your year of birth. a bonus of up to 32% on your total amount.

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