Yahoo Finance Why You Might Not Be Able to Delay Retirement
Delaying retirement for as little as a year or two can significantly improve your retirement finances. An extra year of work gives you more income to save and allows your existing savings more time to grow before you begin taking withdrawals from it. Continuing to work can also qualify you for bigger Social Security payments when you sign up.
However, not everyone is able to work as long as they would like to. Many people are forced out of the workforce ahead of schedule due to a layoff or health problem. Some people also leave their jobs or cut back their hours to provide care to a spouse or aging parents.
[Read: 10 Jobs You're at Risk of Losing as You Age.]
A recent HSBC survey 18,207 people in 17 countries found that employees are planning to save for retirement for seven years longer than current retirees did. The workers in the survey say they started saving for retirement at an average age of 29 and expect to work and save until they are 64. Employees who achieve this work pattern will have 35 years to build a nest egg for retirement. But most current retirees didn't stay in the workforce that long.
Retirees say they started saving for retirement at an average age of 31, but that they typically stopped working by age 59, HSBC found. These retirees saved for retirement for an average of 28 years. Working for fewer years can also hurt your Social Security benefit. Social Security factors in the 35 years in which you earn the most when determining your payments in retirement. If you don't work for at least 35 years, zeros are averaged into the calculation. The age you sign up for benefits also influences your monthly payments, with workers who claim Social Security at older ages getting bigger payouts each month. People who sign up early get smaller monthly Social Security checks.
[See: 10 Jobs Hiring Older Workers.]
Some of the retirees in the survey say they have regrets about their retirement preparations. Many retirees say they wish they had started saving for retirement at an earlier age (35 percent) or put aside a larger share of their income for retirement (31 percent). Some retirees also lament that they didn't take better care of their health (18 percent) and spent too much time worrying (14 percent). Similar proportions of retirees say they should have chosen higher return (9 percent) or lower risk (7 percent) investments , and a few regret that they never obtained professional financial advice (9 percent).
Working people may not be able to save consistently throughout their working life. Among employees who have started saving for retirement, 35 percent say they stopped saving or faced difficulties at some point. Current workers are also far less likely to expect income from a traditional pension plan and more likely to have a 401(k) plan they must individually fund.
While 36 percent of employees say they plan to fund retirement by continuing to work, only 14 percent of retirees say current employment helps to pay their retirement bills. Most of the retirees say they pay for living expenses using a combination of Social Security, personal savings and pension income. Other significant sources of retirement income include stocks, mutual funds and a spouse or partner's income.
[See: The Best Cities for Retirement Jobs.]
More than half (54 percent) of workers say they plan to one day move into a smaller home. Moving into a home that costs significantly less could allow you to quickly boost your nest egg, and also give you an opportunity to reduce your maintenance, insurance and tax bills. Some 17 percent of workers are hoping their home equity will help propel them to a secure retirement. However, only 10 percent of retirees say income from downsizing or selling a property is helping to fund their retirement.
Emily Brandon is the author of "Pensionless: The 10-Step Solution for a Stress-Free Retirement."
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