Delaying Retirement

Are you thinking about retiring someday? Maybe you're imagining more time with family, golf, gardening, or travel. The big questions are: when can you afford to stop working, and what will that look like?

Many baby boomers are working past 65. About 70% of all workers now plan to work part-time after they retire. Economic pressures have also delayed retirement for 2.3 million U.S. households since 2002—a 20% increase from earlier estimates.

Figuring out how much you'll need and when you can stop working isn't simple. Here are some practical steps to help you plan.

• Why delay retirement?
• Before you retire
• When is the right time for you to retire?

Why delay retirement?

People delay retirement for different reasons: market downturns, weak job markets, disappearing pension plans. But working longer also has real benefits. People are living healthier, longer lives, and staying employed gives you more time to build savings, keep health insurance before Medicare kicks in, and increase Social Security benefits.

Delaying withdrawals from retirement accounts means your money grows tax-free for longer. Social Security benefits increase for each month you work past your full retirement age. Health insurance through an employer covers costs Medicare doesn't.

Before you retire

Make a financial plan before you retire. Figure out how much you'll need and when. The sooner you start, the sooner you can work toward realistic goals.

Get specific—Write down when you want to retire, where you'll live, and what you'll do (travel, hobbies, time with family). The clearer the picture, the easier the planning.

Use savings strategically—Withdraw from taxable accounts first so tax-deferred accounts keep growing. Consider cutting expenses before retirement, like downsizing your home.

Think about long-term care insurance—You may need nursing home care or in-home support before reaching your retirement goals. Insurance helps cover those costs.

Rebalance your portfolio—Adjust your mix of stocks, bonds, and cash to match your age and risk tolerance.

Know your account types—Traditional IRAs force withdrawals at 70½, but Roth IRAs don't. 401(k)s have no required distributions if you're still working. Pick the right mix for your situation.

Consider phasing in—Working part-time or cutting back gradually can ease the transition, both financially and emotionally.

When is the right time for you to retire?

A simple example: a 60-year-old has $411,440 in retirement savings and saves $24,000 per year. His investment return averages 8%. He wants $4,000 per month, and Social Security will give him $1,640 at 65. Here's how long his money lasts:

Retire at 62: money runs out by 77. Retire at 65: money lasts to 90. Retire at 67: money lasts to 102. Working three extra years nearly doubles how long your savings stretch.

Get help

A financial advisor can help you combine your retirement strategy with your overall financial plan and align it with your long- and short-term goals.

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Hypothetical example provided for illustrative purposes only. Does not take into account transaction fees or expenses. Past performance does not guarantee future results. This information is provided for informational purposes only. The information is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal, and financial advisor. The views expressed may not be suitable for every situation.

American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisors Inc. and is not a broker-dealer.

This communication is published in the United States for residents of North and South Carolina only; and this advisor is licensed only in the states of North and South Carolina.
Roy P. Janse
Financial Advisor

American Express
Financial Advisors, Inc.
IDS Life Insurance Company
1150 Haywood Road
Greenville, SC 29615
Phone: (800) 554-0805 x141
Fax: (864) 234-7139