Work Longer or Accept Less

In the article "You Control Your Social Security Benefits", you read about how collecting before normal retirement age can shrink your Social Security benefits. Did you know that you can increase your permanent payment for each year you delay the benefit until age 70?

Life Happens

It’s great to have the freedom to choose when to retire. However, some of us lose jobs, face health challenges and encounter other financial obstacles that can have a big impact on our retirement date.

When unanticipated challenges blow up your best-laid plans financially, you have only two choices: Work longer or live on less money in retirement. Here’s a look at both options.

Working Longer

If you’re physically able and employable, delaying your full retirement date is an option. After all, some people actually never retire. By adding a few years to your working life, you can contribute more to an IRA or company 401(k) plan. You also won’t have to tap them for income while you still work.

Delaying your Social Security benefits can also pay off in the long term. Delaying Social Security until age 70 can increase your earning years and potential retirement funds. If you were born in 1943 or later, the Social Security Administration estimates you can increase your eventual benefits by 8% for each year you delay them, up until age 70.

Taking Less

Sometimes, people don’t have a choice and retire before they planned, due to their health or the health of a loved one. You can make do by cutting back on a few things.

Consider relocating. There’s no doubt some states are cheaper than others, and some people choose living abroad, where the cost of living may be much cheaper. Also consider which states tax Social Security and other retirement benefits. Talk to a financial professional to learn more.