When it comes to planning for retirement, the concept of working longer to maximize your Social Security benefits is a common recommendation. The idea is that by staying in the workforce longer, you can increase your eventual benefit, continue to save for retirement, and avoid dipping into your investments to cover living expenses.
However, a recent book titled “Overtime: America’s Aging Workforce and the Future of Working Longer” highlights the fact that working longer may not be a viable option for many individuals. According to the book, factors such as precarious working conditions, family caregiving responsibilities, poor health, and age discrimination can make it difficult or impossible for some people to work beyond their retirement age.
While financial advisors often tout the benefits of delaying Social Security benefits to maximize payouts, the reality is that only a small percentage of individuals actually wait until age 70 to claim benefits. In fact, a significant number of men and women opt to start collecting benefits as soon as they become eligible at age 62.
The Social Security Administration’s own statistics reveal that more than one in eight 20-year-olds will die before reaching age 67, underscoring the potential risks of waiting to claim benefits. Despite this, advisors continue to promote the idea of delaying benefits, citing the 8% annual increase in benefit amount for each year of delay.
A 2022 report from the National Bureau of Economic Research also emphasizes the importance of delaying Social Security benefits, suggesting that virtually all workers between the ages of 45 and 62 should wait until age 70 to claim. However, the authors of “Overtime” caution against relying solely on working longer to boost retirement income, pointing to various societal trends and inequalities that can impact an individual’s ability to work past retirement age.
In light of these challenges, the book suggests that robust retirement and disability policies, as well as support for “good jobs,” are essential to complement any working-longer strategies. Before making any decisions about your retirement strategy, it’s important to consult with a financial advisor who can help you evaluate your options and make informed choices based on your individual circumstances.
In conclusion, while working longer and delaying retirement may be a common strategy for those who are financially unprepared for retirement, it may not be a feasible solution for everyone. By considering the unique challenges and factors at play in your own situation, you can develop a more tailored retirement plan that aligns with your goals and circumstances. Remember, it’s never too early to start planning for retirement – the sooner you begin, the more prepared you’ll be when the time comes to retire.