Though many Americans jump at the chance to retire as early as possible, a growing number of seniors are pushing themselves to work until age 70, or even beyond. If you have the option to continue working until 70, here are a few reasons to go that route.
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1. You'll get to save more money
It stands to reason that the more time you spend in the workforce, the more opportunity you have to save. But working until 70 may be more advantageous than you realize. Boston College's Center for Retirement Research reports that, among workers who are willing to delay retirement until age 70, 86% can expect to enjoy a financially comfortable retirement.
Your mid-to-late 60s also offer a unique savings opportunity for a number of reasons. For one thing, you're probably earning more than you did in the past, only instead of having college to save for, a mortgage to pay, and children to support, you're probably past all that at this point -- which means you can put even more cash into a retirement account.
Furthermore, because workers 50 and over are allowed to make catch-up contributions to tax-advantaged retirement accounts, you can sock away a nice chunk of money while lowering your taxes at a time when your earnings are likely to be high. Specifically, you can put up to $6,500 into an IRA and $24,000 into a 401(k). If your employer offers any type of matching incentive and you contribute enough to take advantage, you'll have even more free money coming your way.
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2. You'll maximize your Social Security benefits
Though you're technically allowed to claim Social Security starting at age 62, doing so will result in a reduction in benefits. On the other hand, if you wait until your full retirement age -- which, for today's workers, is 66, 67, or somewhere in between -- you'll get the full benefit amount you're entitled to. But if you're willing to hold off even further, there's an even bigger reward to be reaped.
For every year you don't take benefits, you'll increase your payments by 8%. So if your full monthly benefit is $1,500, your full retirement age is 66, and you wait until 70 to claim Social Security, you'll increase your payment amount to $1,980 -- and that increase will remain in effect for the rest of your life.
Now, you can't accumulate these delayed retirement credits indefinitely. In fact, the incentive to hold off on benefits runs out at age 70. But if you can work until then and wait on Social Security, you'll be rewarded with significantly higher payments -- forever.
3. You'll have a shorter retirement to finance
The Social Security Administration estimates that the average 65-year-old man today can expect to live until 84.3, while the average 65-year-old woman can expect to live until 86.6. And these are just averages. About 25% of today's 65-year-olds will live past 90, while 10% will live past 95. What this means is that you could potentially have a very long retirement ahead of you, in which case, working longer won't just help you save more money -- it will also reduce the number of years your savings will need to fund.
Not only that, but the longer you keep your savings untouched, the more opportunity you'll give that money to grow. Imagine that, by age 67, you have $500,000 in retirement savings that earns you a conservative 4% average annual return. If you leave that money alone for an extra three years, you'll earn an additional $62,000, which will no doubt come in handy once you stop working.
4. You'll still be young enough to enjoy your retirement
While waiting until your mid-to-late 70s might mean losing out on several years of better health in retirement, given today's life expectancies, 70 just isn't all that old. If you're in good physical shape and don't have any major health problems, retiring at 70 will still give you a number of good years to enjoy retirement to the fullest.
Not only that, but working until age 70 might help you retain your good health for longer. Numerous studies have shown that working helps seniors maintain their physical and mental skills, and a recent report out of Oregon State University even found that working longer could lead to a longer life. All the more reason to keep at it for as long as you can.
Of course, working until age 70 isn't the right choice for everyone, and some people may not get a choice in the matter due to job circumstances or poor health. But if you enjoy what you do and have enough energy to stick with it, you'll be setting yourself up for a far more financially secure retirement.
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