If you're like most people, you probably have a plan for when you want to retire -- and that plan may be to work as long as possible. Almost four in 10 workers responding to a recent Employee Benefit Research Institute survey revealed they planned to keep working until they were at least 70 years old, with financial reasons cited as the top justification for working so long.
Unfortunately, the percentage of workers whoactually retire at 70 or older is shockingly low, and is about 10 times lower than the number of workers who had to retire before age 60, which few workers plan on doing.
If you're forced out of the workforce before anticipated, you'll need to respond in the right way to salvage your retirement. Read on to find out how likely it is you'll have to leave work early, and what to do if this happens to you.
Image source: Getty Images.
You're almost definitely not going to be able to work past 70
According to ERBI's survey, while 39% of workers expected to retire after turning 70, just 4% of current retirees report they were able to work that long. By contrast, while only 9% of workers indicated they'd retire before reaching age 60, 39% of current retirees left the work force before hitting their 60th birthday.
Those who retired early largely did so out of necessity. More than four in 10 workers who left the workforce earlier than planned did so because of health issues while 26% retired because their companies reorganized. Just a quarter of the early retirees did so because they could afford to.
The chances of health issues forcing you out of the workforce are substantial, and real unemployment rates for older workers are higher than unemployment rates for the general population -- so finding new work if you're laid off could be difficult.
What should you do if you're forced to retire early?
If you're forced out of the workplace early, chances are good your nest egg isn't going to be big enough to support you through retirement. Unfortunately, your circ*mstances may also force you to claim Social Security benefits early, which will reduce the monthly Social Security benefits you receive.
So, what should you do if you find yourself in this situation?
- Figure out if you can, or should, claim Social Security: While many people assume you should claim benefits as soon as you're retired, delaying could increase your income. Calculate your break-even point for delaying and, if it makes sense, see if you can live off a spouse's income or survive on savings for a while -- as long as you won't draw down your savings too quickly. You should also see if you're eligible to claim benefits on a spouse's work record if you're widowed, divorced, or your spouse is retired already.
- Determine how much you can safely withdraw from your nest egg:You'll have to be especially careful not to withdraw too much from saving since your nest egg must last longer if you retire early. There are different ways to calculate income in retirement, including determining a set percentage of income to withdraw during your first year after leaving work.
- Make a budget:You'll need to make a budget based on income you can safely withdraw from savings, as well as any Social Security benefits you'll receive. This will indicate whether your lifestyle is affordable or whether drastic changes need to be made.
- Create a plan for healthcare:One of the biggest downsides of early retirement is you may lose employer health insurance coverage before you become eligible for Medicare, or you may not be able to afford out-of-pocket costs incurred while on Medicare. You should exploreways to save on healthcare,including talking with your doctor about cost-cutting measures.
- Downsize and cut spending:For most seniors forced into early retirement, cuts must be made. This could include downsizing your house, moving to a lower cost of living area, getting rid of a vehicle in your household, or cutting off financial support of your grown kids. Take action immediately to downsize when forced to retire early with a nest egg that's too small, as you don't want to spend too much money early on and be left with too little in your older years.
Of course, younger workers should also consider that their plans to work until age 70 may not work out. This should encourage those who have time to save as much as possible, so if they're forced out of the workforce early it won't be the end of their dreams for retirement.
Be prepared for retirement plans not to work out
It's never fun to have plans that don't come to fruition -- especially about something as important as retirement. But, by reacting right away when you're forced out of the workforce early, you'll hopefully be able to stave off financial disaster and still have a reasonably comfortable retirement if you leave the working world before you're ready.
FAQs
Ultimately, if you're in good health, have a family history of longevity, and still enjoy your work, holding off until 70 to file for Social Security may make plenty of sense. Also bear in mind that once you turn 70, your benefit will no longer increase, which means there's likely no incentive to waiting past age 70.
What is the $16728 Social Security bonus most retirees completely overlook? ›
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
What is the biggest financial mistakes that retirees make? ›
Most Common Retirement Mistakes
| Rank | Most Common Mistakes | Share |
|---|
| 1 | Underestimating the impact of inflation | 49% |
| 2 | Underestimating how long you will live | 46% |
| 3 | Overestimating investment income | 42% |
| 4 | Investing too conservatively | 41% |
6 more rowsJan 8, 2024
Yet they're in lockstep with a national trend — older Americans are working longer, into their 60s and even their 70s and beyond. Among Americans 65 and older, 19 percent were still working last year, which is almost a twofold increase from the late 1980s.
Why wait until age 70 to collect Social Security? ›
If you wait until age 70 to start your benefits, your benefit amount will be higher because you will receive delayed retirement credits for each month you delay filing for benefits. There is no additional benefit increase after you reach age 70, even if you continue to delay starting benefits.
What percentage of 67 year olds are working? ›
One-third of American adults between ages 65 and 69 participated in the labor force in 2022. Line chart showing that older Americans are working at higher rates, especially 65-69 year olds.
At what age is Social Security no longer taxed? ›
Social Security tax FAQs
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
What is the 10 year rule for Social Security? ›
If you've worked and paid Social Security taxes for 10 years or more, you'll get a monthly benefit based on that work.
When my husband dies, do I get his Social Security and mine? ›
In many cases, a surviving spouse can begin receiving 1 benefit at a reduced rate and allow the other benefit amount to increase. If you will also receive a pension based on work not covered by Social Security, such as government or foreign work, your Social Security benefits as a survivor may be affected.
What is the #1 regret of retirees? ›
Claiming Social Security benefits too early. Nearly one in five respondents (19%) regretted claiming Social Security retirement benefits too early. The older the respondents were, the more likely they were to express this regret.
Answer: Underestimating the impact of inflation. Underestimating how long you will live.
What are the 9 retirement mistakes that will ruin your retirement? ›
- Top Ten Financial Mistakes After Retirement.
- 1) Not Changing Lifestyle After Retirement.
- 2) Failing to Move to More Conservative Investments.
- 3) Applying for Social Security Too Early.
- 4) Spending Too Much Money Too Soon.
- 5) Failure To Be Aware Of Frauds and Scams.
- 6) Cashing Out Pension Too Soon.
Taxes aren't determined by age, so you will never age out of paying taxes.
Why you should work until 70? ›
5 Good Reasons to Work Until You're 70
- 1. You get more time to build up your savings
- 2. Your savings don't have to last as long
- 3. Social Security will give you a raise
- 4. You could have an encore career
- 5. It reduces your chances of dying
- Live your best life Working until 70 isn't for everyone.
Although 63 is the anticipated median retirement age, workers report retiring at a median age of 62, the survey found. The slight gap indicates that many Americans plan to continue working longer than they actually do.
What is a good age to stop working? ›
Depending on the year you were born, postponing taking Social Security until age 66 or 67 will allow you to receive full benefits. Based on 2021 data, men retire at an average age of 64.7 years, while women remain at work until age 62.1. Retirees at the age of 65 qualify for Medicare benefits.
Is 70 too old to look for a job? ›
Do not let your age discourage you from looking for work. You may be a little slower than you once were, but you can still get the job done. You deserve every opportunity to look for work right alongside your younger peers.
Is 70 too old to start a new career? ›
Changing careers is never too late. In reality, many people change occupations in their latter years. Still, you must consider your priorities in order to determine whether it is worthwhile.
What are the benefits of working past 70? ›
Continuing to work past retirement age as Levine is doing has many advantages. It allows people to spend more from their nest eggs when they do fully retire. Social Security benefits rise substantially when you delay benefits. Some of the most important benefits aren't financial but physical and mental.
