When You Retire Really Matters

Retirement ageAs baby boomers start hitting age 65, putting off retirement for a few years has become all the rage. But even if you're pessimistic about your financial prospects, you may not need to wait as long as you might think to retire securely.

Americans' opinions are quite negative about their retirement prospects. A survey from Wells Fargo (WFC) found that a quarter of the people it surveyed believed they'd need to work until they're 80 to be financially comfortable. Three-quarters expect to work during their retirement years, and while some of those are people who simply want to keep working, the majority say they'll need to do so to cover necessary expenses or to keep up their standard of living.

Yet a new study from the Center for Retirement Research paints a more positive picture for prospective retirees. The news wasn't all good, as the study found that fewer than half will be able to retire at 65.

Workers should take heart, though, because for many of those who can't afford to retire at 65, just a few more years of work will make a huge difference. The study noted that by age 70, 86% of households should be financially prepared.

What's the Difference?

Putting in a few extra years on the job has a number of positive impacts on your finances. Consider:
  • An extra year of paychecks covers living expenses for that year, keeping you from having to tap your nest egg.
  • Working longer also lets you put more of your earnings aside, boosting your savings even further.
  • If your employer provides health insurance, it can save you a bundle versus paying your own premiums. Other employee benefits can also help.
  • An extra year of work between ages 62 and 70 lets you defer Social Security benefits, increasing your eventual monthly check by about 8% per year when you finally take it.

Even with these positives, there are still some big reasons to worry. When you hit your 60s, Social Security may no longer provide the same level of benefits that current law gives retirees. Moreover, even if you want to work, you may not be able to find a job that gives you everything you need.

Nevertheless, for those who do have control of their careers, the decision of when to retire really makes a big difference. The right choice can give you a lot more confidence about your financial future.

For more on making the most of your retirement:

Motley Fool contributor Dan Caplinger has no idea when he'll decide to retire. He owns no shares of the companies mentioned above. You can follow him on Twitter here. The Fool owns shares of and has created a covered strangle position in Wells Fargo. Motley Fool newsletter services have recommended buying shares of Wells Fargo.


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23 Comments

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dollibug

WOW....the government must think we are all CRAZY******they want you to work until you DROP DEAD....so all of the moneys that have been paid into SS can be kept for a rainy day.....and the government can then *SAVE* it to spend on whatever they want to. HOW DUMB IS THIS????? SS is like insurance....they want to COLLECT but they DO NOT WANT YOU TO DRAW.....

April 06 2014 at 5:28 AM Report abuse rate up rate down Reply
marie

Why would anyone wait til they are 70 to collect SS? Full SS is avail between ages 66-67 (depending on when you were born). If you are still interested in working until age 70, you can put the SS check in savings. If you don\'t collect until age 70, you are giving up $75K-$100K (based on SS of $2000/mo) to collect an extra $800 (approx) mo at age 70. While an extra $800 mo sounds good, $100,000 in the bank is much better. Is my thinking flawed?

December 22 2013 at 4:20 PM Report abuse rate up rate down Reply
setanta54s_back

uuuuuuuuuuuuuuh the RULE of life for millions remains to WORK TILL YOU DROP DEAD.

and with all this crappola on ENTITLEMENTS and SS IS EARNED not an ENTITLEMENT
we are TAXED even AFTER WE DROP DEAD
and after SS the BIGGEST SCAM IS MEDICARE which IS NOT FOR FREE EITHER.

December 21 2013 at 9:40 AM Report abuse rate up rate down Reply
donut999

The article clearly ignores there is simply no choice for many who hit 62-66. Depending on their lifetime earnings and resulting monthly benefit, many just cannot live on $800-1200 a month. So working until they drop is not some cerebreal choice.

June 27 2012 at 2:10 PM Report abuse rate up rate down Reply
1 reply to donut999's comment
setanta54s_back

WELL SAID !

December 21 2013 at 9:41 AM Report abuse rate up rate down Reply
Matt

In other shocking news, if you don't save enough, you'll have to work longer.
Retirement is expensive. Make sure you save wisely for it.

June 27 2012 at 11:34 AM Report abuse +1 rate up rate down Reply
Fred

That's about the stupidest retirement article I've ever read.
Using their theory, if you work until you are 100 years old, you'll really have a great retirement.
At 75, I've found how each year you can do less. So you want to retire as soon as you can do so safely, so that you get to enjoy at least a few years of your retirement. (Before your kids put you in a nursing home).

June 26 2012 at 11:53 PM Report abuse +1 rate up rate down Reply
sapphiregrl999m,

I just retired from a part time union job, and getting a pension, still working a full time job and planning to apply for SS, and continue to work full time, I need the SS benefits to help with all my expenses, I am 62 now,single mom , never on govt. assistance.

June 26 2012 at 10:54 PM Report abuse rate up rate down Reply
1 reply to sapphiregrl999m,'s comment
donut999

better do some checking before applying for ss at 62 and continuing to work full time. limits on income kick in for a give back of bennies.

June 27 2012 at 2:07 PM Report abuse rate up rate down Reply
hmalen

Never heard anyone on their deathbed say that they wished they would have worked longer. At some point, working is a waste of time and effort. It is called quality of life and for me that is retirement at age 68.

June 26 2012 at 10:09 PM Report abuse +3 rate up rate down Reply
dodie1990

You would be damn lucky to keep a real job after 55. No one but Wal-Mart(minimum wage) will hire older workers. If you have to keep working it will be for peanuts, and at a job where you are treated poorly.

June 26 2012 at 9:40 PM Report abuse +2 rate up rate down Reply
1 reply to dodie1990's comment
gblank1603

Actually the average at Walmart is over $12 per hour

June 26 2012 at 9:50 PM Report abuse rate up rate down Reply
1 reply to gblank1603's comment
Fred

Yes, the 'average' is, but not for seniors.

June 26 2012 at 11:54 PM Report abuse rate up rate down
schmoyers

Keeping elders in the full time workforce beyond today's "full retirement age" of 66 or 67 for social secuirty purposes will do great harm to the Millenial Genraration. It already is. Boomers and Olders are staying in full time jobs.This is dramartically slowing up hires and promotions for younger people , and espeically veterans, who desparately need jobs to pay off huge student loans and who are approaching prime child rearing age. Post 65 Boomers should be encouraged to work part time so that they can continue to mentor entyry level workers, but forcing them to work to age 70 is harmful to society. Social Security is not facing an huge crisis inthe short term. Lifting the cap of $110,000 which is subject to FICA tax and lowering the FICA tax rate to 5 or 5.5 percent would go a long way to correcting he system. If that is not enough, the incomes of elders should be means tested before they receive Social security. People with incomes over ,say,$500,000 a year don't need much,if any, social security.Think About Warren Buffet, The Koch Brothers, Bill gatges, Sheldon Adelson and the like.They need social security like I need a hole in my head

June 26 2012 at 9:29 PM Report abuse rate up rate down Reply