It is no secret that there are numerous benefits from delaying your retirement. A few extra years of work could provide an individual with a higher social security income and a larger savings balance. According to Fox Business, the average worker could increase their annual retirement income by as much as $9,500 by delaying retirement.
If this same worker continues to work for another five years, they will contribute significantly more to their retirement accounts. If this worker contributes 15% and gets a 3% match from their employer, that’s an additional annual savings of approximately $10,000 a year (and $50,000 in five years). At an average rate of 5%, your additional contributions should grow to about $58,000 in five years. This would result in $2,320 of retirement income annually (based on a 4% withdrawal rate), in addition to the $7,008 in annual benefits from delaying social security. These benefits will increase for individuals with larger incomes.
It is important to know how to estimate the value of postponing retirement in advance. You can create an account at “my Social Security” (www.ssa.gov/myaccount/) to view what your benefit would be for any potential age in which you may retire. Visualizing the monetary benefits of delaying retirement may aid in your decision. In addition, working a few extra years allows you to take advantage of your employer’s insurance policy. This could be valuable, especially considering out-of-pocket healthcare costs can be high.
Sources:
All data is derived from sources believed to be reliable.
5411123SC_Jan25