People often wonder if they should wait a little longer before finally retiring. While people can choose to leave the workforce at age 60, 62, 65, or any other age that suits them, it’s important to maintain some flexibility in these plans.
Learn more | Social Security update: Here’s why some beneficiaries won’t get their checks in 3 months through 2026
Here are some signs that retiring a year later than planned may actually work to your advantage.
Three signs you should delay retirement for a year
The Motley Fool lists these three indicators that you should retire a year later than planned:
- If you’re still carrying some high-interest debt, you should reconsider retirement. Any high-interest debt, e.g. credit card or an unsecured loan balance, could mean you end up having to spend a large portion of your retirement income, putting you under financial stress. On the other hand, if you wait a year before retiring, you may be able to reduce your debt even more.
- You have to rethink your retirement plan If you are not yet of Medicare age. Health care can actually be one of your biggest expenses in retirement, and if you retire before you’re eligible for Medicare (which usually doesn’t happen until age 65), the cost of buying health insurance can become a big problem. Waiting an extra year to retire can help you avoid a coverage gap. For example, if you are 64 years old and remain employed and enrolled in your company’s health plan, you will likely be able to transfer to Medicare without having to buy your own insurance.
However, even if this is not the case, it can still be beneficial to wait a year before retiring. For example, if you are 62 years old, you have a three-year gap before you are covered by Medicare, and within three years you may need to buy your own health insurance. However, if you work an additional year and get health insurance through your job, you avoid facing three years of premiums and only face two.
3. You must also postpone your retirement plans if you have not yet determined when you will receive your pension social Securityand hope to get more from these benefits. If you don’t already have a claims strategy, it may be helpful to retire a year later and even help you get more from Social Security. For example, if you are 62, you can file for Social Security, but your monthly benefits will be reduced by about 30% compared to waiting for full retirement age, which is 67. If you work another year and wait for Social Security during that time, it could mean your monthly check will be reduced by 25%, which is better than 30%.
