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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What is the majority of this country's people saying? I hear the candidates from both sides for this nation's highest office say things aren't so good so at least they agree on something!

Something has to give they can only cook the jobs data so much before reality over comes the cooked figures.

December 28 2015 at 10:51 PM Report abuse rate up rate down Reply

Consider the many different years of posts on this article 2012 and soon it will be 2016. In the past few years several people that I knew past away before the age of 60. Many years of a declining Middle Class due to recessions , trade deals, and excessive restructurings have pushed many Americans into poverty and out of the work place. Surely the future as it stands tells me another recession or depression is coming soon so most of us older Americans would be foolish to push ourselves into an early grave trying to get back all we lost in benefits and savings from the years of declining economies and unusually expensive healthcare costs. By the time you find a job you might be out of a job or dead because of the current working climate and overzealous people who will clime over your dead body to get where their going to in a vain attempt to chase a dream that isn't available in this age of insider trading and global outsourcing.

Like I said I know many people that never made it to even age 60. Today's under staffing, other technologies, and pure greed in the market place will further reduce employment and incomes. You don't know how much time you got to live or what health you will have as you try to reach beyond 60 plus. Pray to God because you haven't much choice!

December 28 2015 at 10:03 PM Report abuse rate up rate down Reply

The point of the article is that under the current system, when you retire matters. So let's consider that system, social security. Under this system, there is no investment in participant contributions, so don't fantasize about your lifetime investments! Also, the lifetime contributions are not saved to any degree. SS is a Ponzi taxation scheme, where current contributors "fund" current SS beneficiaries. SS contributions have always exceeded annual payout! A social security system based on trust fund exclusivity and investment (part Ponzi, part self-managed variable annuity) is the best way to provide social security going forward.

December 24 2015 at 10:54 AM Report abuse rate up rate down Reply
Claudia Scott

Retirees should receive all they deserve at the time of retirement. The full SSI that they put into it and all. It's not right that a few hundreds of individuals should decide when a person who has invested their lives in positively maintaining this nation should be prevented from getting what they deserve at the time of retirement. They are getting all the benefits while they are in office, and the retirement system for most is not equitable.

April 16 2015 at 6:16 PM Report abuse rate up rate down Reply

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 +1 rate up rate down Reply
1 reply to dollibug's comment
Claudia Scott

That's why they want the so called financial experts to put articles like this out. To convince the citizens we should work until we can't collect.

April 16 2015 at 6:18 PM Report abuse rate up rate down Reply
1 reply to Claudia Scott's comment

In many occupations the companies are trying to make it miserable for anyone over age 50 so they can replace them with younger and less costly younger people. Apparently the government isn't doing their job to prevent that unfortunate situation from happening. My view is this economy will fold before it really corrects the decline of the middle class.

December 28 2015 at 10:19 PM Report abuse rate up rate down

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
1 reply to marie's comment

And what rate of interest would that SS check be drawing in a savings account? I am currently NOT drawing my SS and plan on getting as close to 70 as I can while it grows at 8% a year. That's better than any savings account rate I can find . I am nearly 67, still working, making as much as I want with no restrictions, putting 30% of each paycheck into my 401K (this is a huge plus) and drawing a spousal benefit from my husband of over $1k a month. So see, I AM collecting, just not my own. Retirement is all about planning and this includes researching the best SS claiming strategies out there for yourself. Unless you absolutely have to claim at 62 because of poor health or need the money, delaying your SS benefit can only work in your favor.

April 26 2014 at 9:16 PM Report abuse rate up rate down Reply
1 reply to CommonSense's comment
Claudia Scott

In your case if you are making a very good salary and want to wait to collect, I can see that. Unfortunately not everyone is in your position. It's easier to say wait, but for those who are not getting a great annuity and cannot find another job it's not that simple.

April 16 2015 at 6:22 PM Report abuse rate up rate down

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

December 21 2013 at 9:40 AM Report abuse rate up rate down Reply
1 reply to setanta54s_back's comment
Claudia Scott

Yes, the real crooks are making the decisions.

April 16 2015 at 6:23 PM Report abuse rate up rate down Reply

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 +1 rate up rate down Reply
1 reply to donut999's comment


December 21 2013 at 9:41 AM Report abuse +1 rate up rate down Reply

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

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 +2 rate up rate down Reply
1 reply to Fred's comment
Claudia Scott

I'm sure they are aware of this Fred.

April 16 2015 at 6:25 PM Report abuse rate up rate down Reply