Investing
May 18, 2020

Nearing Retirement? 3 Reasons Why You Should Postpone

Written By Emily Jones
Last updated May 20, 2020

Simple. Thrifty. Living.

With the economy in free fall, and the stock market up and downs, many individuals nearing retirement and worried, and for good reason. Last week, the federal government announced unemployment numbers, and they are far from good. Jobless claims due to the coronavirus reached 36.5 million. Economists are expecting that number to grow. With the economic outlook so bleak, many nearing retirement are wondering if 2020 is the right year to leave their careers. 

With the ups and downs of the stock market, postponing retirement gives 401(K)s a chance to rebound a bit. Experts advise, if you can stay in the workforce, you should. Continuing to work is one of the best ways to ride out an economic downturn. Even working part time can help aide in the retirement transition.

Financial Security

Postponing retirement by a year or two can give retirees some room to breath. Selling stocks during a downturn means locking in losses. Continuing to work allows for the US economy and stock market to recover. In turn that 401(K) could look a lot healthier come 2022.

Another reason to continue working is the ability to increase your Social Security payments. If you are in good financial standing and have reached your full retirement age, 66. You can delay your social security benefits until age 70. By delaying payments you could increase your monthly payment by 8% for every year you forgo. This type of increase can be significant for many retirees. All you need to do is notify Social Security.

As mentioned above, the job loss is staggering. So for those who are still healthy enough to work there are other benefits to staying in the workforce. Earning a paycheck during an economic downturn isn’t just a smart money move. But it can also provide more social connection during a time of isolation. Experts agree, that working into retirement can have a number of mental health benefits. That being said, if your job is high stress, prolonging retirement may not be the best move emotionally. 

As expected, as life span increases so does the retirement age. Given the staggering job losses, its safe to assume that pushing your retirement age out will no longer be choice but a necessity. Even for those no where near retirement age.

Pulling from Retirement

Many families aren’t able to save during this time of crisis, in fact, many have had to pull from retirement accounts. This will only cause a further delay in retirement age. If you’re considering pulling from your accounts, make sure to file with the IRS. There are a momentary pause in early fee withdrawal due to the CARES Act. The only catch, you must repay the amount taken out within two years.

About the Author

Emily Jones

Emily Jones has been writing for personal finance blogs for over 5 years. Her specific interests include, budget travel, living well on a budget, and deal finding. While in graduate school Emily was forced to find creative ways to be able to afford to travel. Now that she has a family, her affection for travel and shopping continue, but on a very tight budget. Emily enjoys sharing her deal finding tricks with her readers.

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