Many folks eagerly anticipate retirement, with some preparing for the magical age of 62—the earliest age you can draw Social Security. For these people, the notion of working an extra four years to the full retirement age of 66 might not be a sacrifice they’re willing to make.
A recent Kiplinger article asks, “Should You Put Your Countdown to Retirement on Hold?”
For example, the article asks, would you consider working longer if it meant as much as an extra $10,000 in annual income in retirement? If you are one of the more than two million federal employees (including military), working to age 66 can make a big difference. For a federal employee who earns an average of $50,000 a year, her retirement income at age 62 would be $26,400. With an additional $21,000 from Social Security, it gets her an annual income of $47,400—less than her current annual salary. However, if she worked four more years, to full retirement age at 66, her retirement income would be $30,247 and her Social Security would increase to $27,000. That means her total annual income would jump to $57,247—about $7,000 more than her annual working income. Income from a Thrift Savings Plan would increase this figure even more.
One thing about federal employees: they can have a complex set of benefits and different retirement plans. Those who started work before January 1984 were hired under the Civil Service Retirement System (CSRS), and those hired after January 1984 became part of a plan called the Federal Employees Retirement System (FERS). These employees were also required to pay into Social Security.
Female federal employees have a particular set of issues when planning for retirement. This is because historically women earn less, have less saved, work fewer years (due to child rearing and family obligations) and typically have low retirement confidence. Some married women may believe their spouse will take care for them, but that isn’t always the case. As a result, women often take fewer proactive steps in planning for retirement.
These days, women outlive men in every country in the world. The Social Security Administration finds that a woman turning 65 today can expect to live, on average, to 86.6, compared to 84.3 for a man. Therefore, women need to have a strategy for long-term care. They comprise the majority of those living in nursing homes.
Those extra-four-year numbers above may be looking more attractive. Delay retirement and start a four-year countdown to a retirement that will let you more comfortably enjoy your golden years.
Reference: Kiplinger (August 2017) “Should You Put Your Countdown to Retirement on Hold?”