Should You Delay Retirement? 8 Reasons You Might Want To

If you’ve been dreaming of retirement since you entered the workforce, you might have a certain idea of what it looks like. But there’s a chance you might not start retirement when you thought you would, perhaps due to circumstances beyond your control or because you’re simply not ready to exit the working world. While life doesn’t always go according to plan, would-be retirees can make the best of a delayed retirement timeline, and may even find that putting it off for a few years is a good idea.

8 reasons to delay retirement

Amid a shifting economic landscape and the possibility of living longer than ever before, the traditional retirement age of 65 to 67 might not be the best plan for everyone. For some, punching out for the last time may need to be pushed back a few years. (A financial advisor can help you run the numbers.)

Here are eight reasons why you might want to rethink your retirement timeline.

1. You give yourself more time to save and invest

For many retirees, $1 million is the magic savings number for retirement, but most Americans are nowhere close to that figure. According to Vanguard’s “How America Saves 2024” report, workers who were between 45 to 54 years old in Vanguard’s retirement plans had a median of $60,763 at the end of 2023. Those aged 55 to 64 had a median $87,571 in their plan. 

Delaying retirement gives you more time to save for your golden years and less time to live off your savings. Many retirees fear they will run out of money before they die, so the more time you spend saving, the less you’ll depend on that nest egg when the time comes to stop working.

2. You can delay Social Security for a bigger payout

While you can file for Social Security benefits as early as age 62, the longer you put it off, the higher the amount you’ll receive. Waiting until your full retirement age — or all the way until you hit 70 —  significantly bumps up your benefits. For example, if your full retirement age is 67 and you delay filing until age 70, you’ll get a 24 percent boost in your monthly Social Security check. 

Delaying Social Security means you’ll need to rely on income from another source until you file by either drawing down from your nest egg or continuing to work. But even if you do have to work a little while longer, you’ll be locking in some more Social Security boosts while you’re on the clock.

A financial planner can help you calculate the ins and outs of delaying Social Security to help you maximize lifetime benefits for both you and, if you’re married, your spouse. 

3. You like what you do

Not everyone enjoys their jobs, and many look forward to the day they don’t have to go into the office anymore. But if your job brings you satisfaction, don’t feel compelled to stop once you hit a certain age. Aside from income, working has numerous other benefits for emotional, psychological and mental health. Older workers needn’t stop working at a certain age, especially if they enjoy it.

4. You can capitalize on other work benefits

While income is useful, a job typically provides valuable benefits beyond just a paycheck. For instance, your employer may help pad your retirement portfolio via an employer-matched 401(k) program. Access to workplace health care benefits can save you a lot of money if you don’t qualify for Medicare yet and would otherwise have to pay out-of-pocket for coverage.

You might also want to stick around at your job to keep access to other perks, such as reimbursement for continuing education, gym memberships, reimbursement for some bills and more.

5. You can wait out inflation

Inflation may have cooled a bit since the summer of 2022, but if it picks up again, you might consider delaying retirement. It can make sense to wait out rising prices and ensure that your finances are on a stable footing before you move on to the next stage. As you wait, use Bankrate’s retirement calculator to figure out how long your money will last.

6. You’re stuck and unable to retire

Sometimes important elements of your retirement plan get derailed. For instance, you may not be able to downsize because of an uncertain housing market. Or maybe you got laid off and had to find a job that wasn’t what you traditionally did for work, so you’re making up for lost income now. Maybe you wanted to relocate to be close to family, or sudden health concerns have eaten up more of your budget than you expected. Regardless of the reason, you may not be able to retire now and may need to re-evaluate your plans or consider alternatives, including working longer.

Using inexpensive (even free) financial planning tools allows you to run what-if scenarios and see how adjustments to your plans will play out in real life. 

7. Health insurance

If you opt to retire before reaching the age of 65, the age at which you become eligible for Medicare, you will need to secure health insurance. Several options exist, including COBRA coverage, which can extend your employer’s group health plan for a certain period, usually 18 months. Alternatively, you might be able to join your spouse’s employer-sponsored coverage or explore individual plans in the health insurance marketplace.

Remember, though, retiring early can significantly impact your health insurance options and associated costs, primarily because of the coverage gap before you qualify for Medicare at 65.

8. Continue to delay taxes

Delaying retirement can also provide you with the opportunity to defer taxes on certain retirement accounts. If you continue to work past age 73, you will still need to take required minimum distributions (RMDs) from your traditional IRAs, regardless of your employment status.

However, if you are working and don’t own more than 5 percent of the company you work for, you might have the option to delay RMDs from your current employer’s 401(k) plan. It’s important to familiarize yourself with the specific rules of your plan and seek advice from a financial advisor to avoid any potential penalties.

Bottom line

Retirement isn’t a one-size-fits-all path. If you have to delay retirement for whatever reason — unexpected events or by choice — the tradeoffs aren’t all bad. Delaying gives you time to build your nest egg, pad your Social Security benefits and save money on taxes and other expenses along the way. Take some time to review your options so you can map out a path to retirement in the future. Use Bankrate’s AdvisorMatch tool to find a financial advisor who can review your specific situation and keep you on track to achieve your retirement goals.

— Bankrate’s Dayana Yochim contributed to an update of this article.