By Kent Rentschler
Whether you stop working and retire because you are ready to relax more or because you physically need to exit the working phase of your life, retirement traditionally means completely giving up your profession once you hit a certain age.
However, these days, the realities of retirement seem to be evolving for a few reasons.
Financially, some people simply can’t afford to retire. Traditional pension plans are less common than they once were and there are some concerns about the long-term viability of Social Security, which means that funding your retirement could rest squarely on your shoulders. The reality is that many Americans simply do not have enough funds to stop working.
On the other hand, some people reach retirement age and are not ready to quit working altogether. They might enjoy the mental or physical work and/or the social aspect of their job.
If you plan to continue working, here are some things to know about delaying retirement.
1. Plan ahead.
In order to make sure you don’t feel like you are forced to keep working, start saving as early as possible and work toward financial independence. The reality is that a lot of people who continue working past the traditional retirement age will do so out of necessity because they can’t afford to retire.
It’s certainly easier said than done, but after putting in decades of hard work, your retirement age should be a choice – and that will require planning for years, if not decades, prior to retirement.
While you are still working, think about the age by which you would want to be financially independent. That doesn’t mean you need to retire at that age, but by that time, you should have the money to make the choice of whether to continue working.
From there, think about how much money you will need in retirement and plan accordingly. Live below your means and invest your excess cash for later in life when you will likely need it more.
Most employers offer easy ways to save. Take advantage of a work-sponsored retirement plan if you have access to one so that your contributions come out of your paycheck without a second thought. And of course, take advantage of employer matching if it is offered – that’s free money.
If your employer doesn’t provide a retirement plan, consider opening your own investment account where you can save for your future.
2. You can still collect Social Security benefits.
You can collect Social Security benefits once you reach an eligible age, even if you’re still working. However, the benefits could be reduced, meaning you wouldn’t receive as much money.
While every situation is unique, it may make sense to delay collecting your Social Security benefits while you are working. Your advisor can help you decide when it makes sense to start collecting Social Security.
To get you started, here is a handy calculator to help you determine your Social Security eligibility age.
3. Retirement doesn’t mean you need to stop working entirely.
There’s nothing wrong with scaling back your responsibilities or taking a part-time job through “partial retirement.”
The trend of working longer likely will continue, but people are redefining what retirement means. Future generations most likely will reject the idea of a traditional retirement and embrace a partial retirement.
With a partial retirement, you can pursue a new career path, new hobbies or side projects, or engage in volunteer work or part-time work.
4. A professional can help you decide whether delaying retirement makes sense.
When it comes to retirement, there can be serious consequences to changing your plans frequently or on short notice.
There’s tremendous value in hiring a professional advisor to help you map out how you want your retirement to look. An advisor can help forecast when you will be able to retire based on your financial situation and retirement lifestyle goals, and can also help you plan for your expenses in retirement, including rising health care costs.
After working for so long, you deserve the retirement of your dreams, whether that means traveling the world, spending time with family, volunteering or working part-time. By planning ahead and making financial choices to help support the lifestyle you want, the decision of how to spend your retirement is yours and yours alone!
Kent Rentschler is a Certified Financial Planner™ and wealth strategist at PNC Wealth Management®
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