Live A Richer Life By Working Longer And Retiring Later

This post first appeared on Forbes.

Ever hear the quote, “an idle mind is a devil’s workshop?” This concept of remaining busy is often the case for those who find working a critical part of their mental health and happiness. And in terms of finances, working has an equally positive effect on your wealth.

So, when it comes to retiring, working further into your lifecycle may have many benefits. Especially if postponing retirement gives you a higher quality lifestyle for when you decide to leave the workforce. These days, working longer and retiring later may be one of the most appealing ways for successful financial and retirement planning. 

Realistic Savings For Retirement

A goal many financial planners recommend is that their clients save 20% of their annual salary. This amount of savings is often a struggle when meeting the necessary monthly expenses such as a mortgage, insurances, groceries, and car payments. Add in the basic extracurricular costs of children’s activities, vacations, and simple luxuries, including hair and wardrobe maintenance, and many families cannot meet this 20% savings goal.

Considering these realistic expenses, financial planners often recommend that individuals continue to work a little longer to save for retirement. This longer work cycle allows families, single parents, and individuals to live their best lives in the present and the future.

Working Longer Benefits The Present And The Future

The option to work longer is an intuitive way to increase the opportunities to save for retirement. More time in the workforce is helpful for those with unexpected financial challenges earlier in life and for those who choose to “Carpe Diem” and live each day to its fullest so that saving for the future takes more time.

However, choosing to work a few more years is not the only resource for successful financial planning. Other unavoidable life occurrences could interfere with this strategy, including sickness, special needs, or employments changes. So, diversifying savings is always important when seeking to retire with wealth, health, and happiness.

How Working Longer Benefits The Retirement Lifestyle

Choosing to extend the number of years employed has positive benefits to a retirement life as well. To begin, opting to go part-time or work as a consultant versus full-time in-person work is one strategy for continuing to work. These alternative work options stretch out earnings while not sacrificing the quality of life early on in retirement.

There is also the option to work harder the last few years of employment when you can often make the most money. Usually, living expenses and family responsibilities decrease later in your career, so you have more time for your professional life.

Holding Off On Collecting Social Security Has Its Benefits

If working into your 60s is an option, then delaying Social Security is a good idea. Holding off on collecting Social Security allows you to save in taxes if earning a high salary. Another advantage is that for every year you hold off on Social Security, you keep 8% more in your monthly benefit until the age of 70.

The Social Security savings are a great way to increase your retirement savings as it locks in a high fixed income. And for many, Social Security is the only consistent paycheck for when leaving the workforce.

Diversifying Your Portfolio By Working Longer Helps Save

A strategic financial planner will share that retirement investments are subject to market volatility. Variable annual growth means a well-balanced portfolio will grow approximately 3 out of every four years.

Therefore, if you retire later, there is the opportunity for your savings to benefit from compound interest. It is important to note that there is no guarantee that past performance is indicative of future returns, which is why diversification is also critical. 

It Is Less Risky To Retire Later As Assets Have Time To Mature

Logically, working later in life helps substantially grow your savings and assets by not pulling from them earlier. Therefore, waiting a few years to retire gives additional time and puts less risk on the returns necessary not to outlast your funds.

Regardless of when you retire, you still pass away at the same age. Under this assumption, someone retiring at age seventy has ten fewer years to rely on their nest egg. This impact can be huge!

Hoarding Money Is A Good Thing For Retirement Savings

Another key benefit of working longer is that it allows you to save money those last few years aggressively. If your mortgage, children’s expenses, and other significant loans are paid for in full when you are earning the most, the opportunity for substantial savings is enormous. 

Working Longer Proves To Save More For Retirement

There are many financial benefits to working longer and retiring later. This delayed retirement gives you the ability to save more, grow more, and live more-all with less risk to your retirement.

The working more strategy is a viable option for a successful financial plan. Ultimately, it affords much flexibility to live and retire in wealth, health, and happiness.