Wealth Management & Financial Planning

Wealth Management & Financial Planning

When Is The “Right” Time to Retire?

Who doesn’t want to retire? More people than you may think, including myself. The rational and reasons for continuing to work come from the obvious “I love what I do” to “What would I do?” Our experience would suggest there is also a large contingency that is simply unwilling to spend down their life savings.


Delaying retirement on your terms is fine if that floats your boat.  However, delaying leaving your job because of financial challenges can bring on a host of unexpected challenges. Murphy’s Law seems to raise its head when the worst possible thing that can happen not only happens but occurs at the worst possible time. You suddenly need resources that you simply don’t have.


One challenge is losing your job when you intended to keep working.  This can occur due to a variety of reasons including economic downturns or because of your own health.  In either case, you were counting on an income stream that can suddenly disappear.


Working later than expected can also cause your Medicare Part B premiums to possibly be higher depending on the income you are earning. Like all things, one decision – delaying retirement in this case – can have multiple impacts across your financial landscape.


You can put off Social Security until age 70 if you so desire.  For many Americans that would be the wise choice but each of our circumstances is unique. The Social Security Administration tells us most people opt for a check earlier than wait for full retirement age let alone delay receiving benefits beyond their 70th birthday.


Even if you are working at age 70.5, you will still have to pull your required minimum distributions (RMD’s) from your IRA accounts. The more you make the higher the tax rate can be so RMD’s, Social Security and your working income can add up quickly, driving you to a higher taxation percentage. Side note: This is not true in the case of 401(k) plans where, assuming you own less than 5% of the company, you can delay RMD’s while you are actively employed.


There is also a challenge when spouses with gaps in their ages get married.  Often times one spouse retires sooner than expected harming their future social security payments in order to enjoy retirement with their older spouse. The older spouse delays helping their payments rise.


The big challenge for many families is “What would I do?” Individuals who love their occupation without interests and hobbies struggle to fill their week. This can lead to boredom and some social scientists argue even bring on early death.


Waiting to retire or delaying the decision is an awesome way to increase your account value and decrease the amount necessary to fund a successful retirement.  The longer you wait, the fewer years you will have in retirement lowering the amount needed as well as the impacts of inflation. This is not the right choice for everyone, but delaying is an option with side benefits.


Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see our Disclosure page for the full disclaimer.

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