If you’re nearing retirement without much savings, postponing that milestone could be your optimal move.
Many people have a hard time setting aside money for retirement savings while they’re working. You might tell yourself you’ll cut back on leisure spending one year, only to then have a car repair you can’t put off. And you might pledge to reduce your spending another year, only to require surgery and get stuck with a pile of medical bills in its aftermath.
Plus, if you’re a parent, your children might take up all of your money, whether in the form of food, clothing, or college tuition. And your bills may not shrink until your kids are grown and out of the house, at which point you might face costly repairs due to having an older home.
s such, it’s easy to see how you may have gotten toward the end of your career with little money in your IRA or 401(k) plan. And that’s clearly not a great position to be in. But if you’re willing to extend your career, you can turn an otherwise unfavorable financial situation into a better one. Here’s how working longer might really salvage your retirement.
1. You’ll be able to leave your limited savings alone
Maybe you’ve only managed to sock away $50,000 for retirement and are already in your mid-60s. That’s not a lot of money over the course of what could be a 20-year retirement or longer. But if you work a few extra years, you’ll at least be able to leave that $50,000 alone. That will allow it to stay invested a little bit longer, during which time you might enjoy some nice gains.
2. You might be able to add to your savings
If you extend your career and really buckle down on spending at the tail end of it, you might manage to free up a little extra money for your IRA or 401(k). That could go a long way toward helping you cover different expenses during your senior years, like healthcare.
3. You can set yourself up to score a higher monthly Social Security benefit
You’re entitled to your full monthly Social Security benefit based on your personal income history once full retirement age arrives. Depending on your year of birth, that age could be 66, 67, or somewhere in between.
But each year you delay your Social Security filing beyond full retirement age, up to age 70, your monthly benefit gets an 8% boost you get to collect for the rest of your life. So if you keep working a few extra years, it could result in thousands in extra Social Security income annually while you’re retired — a great way to make up for a smaller nest egg.
It’s easy to see why you might be in a panic if retirement is getting closer and your nest egg isn’t much to write home about. But if you’re willing to work longer, you might manage to stretch and boost your savings, all the while setting yourself up with more Social Security income to enjoy for the rest of your life.
