Secure Your Financial Future By Delaying Your Retirement

By Pinyo, on June 3, 2009

Recent economic mess and stock market decline left many people wondering if they’ll have enough money for their retirement. Many will just have to adopt a more frugal lifestyle, but some people are lucky enough to have the option of delaying their retirement. If you are in this latter group of people, here are several reasons why postponing your retirement might be a good idea.

3 Benefits Of Delaying Your Retirement

1. It allows you to keep adding more money to your retirement savings. Not only are you delaying the withdrawal, the new fund will help your portfolio grow in the right direction.
2. It gives your portfolio more time to grow — or in our case, to recover. Assuming you have a $500,000 retirement portfolio and it grows at 5% per year for the next 3 years, you would end up with $579,000. Your additional contribution over the 3 years could easily put this over $600,000.
3. Each additional year that you work is one less year that you’ll have to depend on your retirement savings. If you need $24,000 a year to retire, that $72,000 you don’t have to withdraw over the first three years.

Delaying Your Social Security

In addition to keeping your money invested, you could also delay your Social Security benefit. Each year that you do, the benefit increases by 8% between the full retirement age and 70 (www.ssa.gov), thus giving you more money to work with when you need it. For example, if your benefit at full retirement age were $1,000 a month, you would get $1,080 by delaying a year, $1,166 for 2, and $1,260 for 3.

Several of my friends decided to postpone their retirement because of the economy and stock market decline. Are you doing this as well? Why? Please share your story.

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Pinyo is the brain behind Moolanomy personal finance blog and a few other web sites. If you like this article, please subscribe for free daily email updates.

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