Retirement mistake no. 7: Retiring too early
Sep 11th 2009 1:20PM
Updated Dec 4th 2009 3:21PM
Retirement mistake #7 is retiring too early.
The year 2008 was annus horribilis for investors planning to retire. Many lost a significant portion of their retirement nest egg. The biggest mistake these investors could make is retiring too early.
Remaining in the workforce can dramatically improve your chances of eventually affording a comfortable retirement.
Let's start with Social Security. For every year you continue work, expect your Social Security payments to increase by 7 to 8 percent. You should see a similar increase in the value of your 401(k) plan.
Of course, while you are working, you are not depleting your retirement savings. This has a double benefit: your money continues to grow and you won't need it for as long a period of time.
Consider a typical 62 year old, nearing retirement. By remaining employed three or four more years, she could boost her retirement income by almost 25 percent.
You should carefully consider the impact of working just a few more years before you make the decision to retire.
See all ten of the biggest money mistakes a retiree can make.
Dan Solin is the author of the newly published book, The Smartest Retirement Book You'll Ever Read (Perigee Books 2009). His prior books include the New York Times bestsellers, The Smartest Investment Book You'll Ever Read and The Smartest 401(k) Book You'll Ever Read. See SmartestInvestmentBook.com. Read more about Dan Solin.