The idea of working longer before claiming Social security Benefits sound like a great retirement strategy. Staying employed means you can maximize your eventual benefits, continue saving for retirement and avoid tapping your investments for living expenses.
There’s just one problem: working longer is an unrealistic option for many. That is the conclusion the book reaches “Overtime: America’s Aging Workforce and the Future of Longer Work” A collection edited by Lisa F. Berkman and Beth C. Trousdale, published by Oxford University Press in 2022.
“Although today’s middle-aged adults are less financially prepared for retirement than today’s retirees, delaying retirement is not an appropriate solution,” the editors wrote. “Precarious working conditions, family care responsibilities, poor health, and age discrimination make it difficult or impossible for many to work longer.”
A financial advisor can help you decide the right time to retire. Find a credit counselor today.
Look at the numbers
This conclusion is confirmed by the Social Security Administration’s own statistics. While nearly 13% of workers approaching retirement say they will wait to claim the largest possible benefits, only 5% of people are waiting to claim benefits at age 70. Instead, about a quarter of men and a third of women choose to collect benefits once you become eligible at age 62.
Worse still, Management notices this “(M)ore than one in eight of today’s 20-year-olds will die before they reach age 67.”
However, financial advisors continue to promote the idea of waiting to maximize your benefit. On paper, it’s a perfectly logical idea: delaying your benefits from… Full retirement age From 67 to 70 adds 8% to your benefit amount each year, which is a cumulative 32% increase in benefit cash. Since Social Security benefits adjust for inflation, a larger initial benefit means a larger increase Cost of living adjustments.
The problem of working longer
As 2022 A report issued by the National Bureau of Economic Research noted, “Americans are known to be bad at saving. Large numbers reach old age so poor that they cannot finance retirements that can last longer than those in which they worked,” the study concluded. “Nearly all American workers aged 45 and 62 year olds must wait until after age 65 to collect their paychecks. More than 90% must wait until the age of seventy.”
The idea makes sense and the Overtime editors agree. “Longer life expectancy means Americans need income to support longer life years, and working longer is a commonly proposed solution,” they wrote.
Comments are closed, but trackbacks and pingbacks are open.