Delaying Retirement


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Are you dreaming about retiring and having more time with your children and grandchildren, playing more golf, gardening or traveling? When can you afford to retire and what will that new stage of your life look like?

According to the Employee Benefit Research Institute, a growing number of baby boomers say they’ll retire after age 65, and 70% of all workers now plan to labor at least part time after quitting their careers. Furthermore, current economic conditions will force 2.3 million U.S. households to delay retirement in more than a 20% increase from 2002, according to a recent survey by Intuit Inc.

Calculating how much money you will need in retirement and when you can afford to stop working can be complicated and confusing.  Here are some tips to help you plan your retirement wisely and stay on track with your retirement goals.

Why delay retirement?

There are many reasons why people are delaying retirement.  Recent market downturns, the weak job market and the dwindling number of traditional pension plans are all factors, according to Consumer Reports.  However, working longer as you live longer (and in better health, thanks to modern medicine) offers some basic advantages you should factor into your timing of retirement.

First of all, delaying retirement allows your nest egg to continue growing and insurance benefits, such as health coverage, can pick up expenses that Medicare won’t.  Secondly, if you can delay withdrawals from tax-deferred benefit plans, your money has more time to grow tax-free.  In addition, Social Security benefits increase a certain percentage for every month past your full retirement age that you keep working, with certain restrictions.

Before You retire

Before you retire, it’s important to develop a comprehensive financial plan and know how much you will need and when you will need it.  The sooner you have a plan, the sooner you can work realistically toward your goals.

Get specific – Set your retirement goals, including when you would like to retire, your housing plans and other lifestyle considerations, such as travel and vacation plans.  Be as specific as possible to create a clear picture of where you are heading.

Super savings – Stretch savings by withdrawing from taxable savings accounts.  This allows any tax-deferred accounts you have to grow.  Consider cutting expenses, such as downsize your housing, before retirement.

Evaluate insurance – Consider buying long-term care insurance, which you may need if you become unable to work before you reach your goals and require special treatment such as nursing home care.

Get in balance – Rebalance your portfolio to create the right mix of stocks, bonds and cash.

Know your IRAs – Don’t over-invest in traditional IRAs because these accounts require withdrawals starting at age 70 ½.  Instead consider investing in Roth IRAs you won’t have to take a distribution in your lifetime — and 401(k)s — no distributions are required as long as you are working.

Other Options – Consider working part time or easing into retirement slowly, which may help you adjust to your new stage of life, both financially and emotionally.

When is the right time for you to retire?

How do you know if you have saved enough so your assets can stretch through your lifespan?  It takes some careful planning.  For example, consider a 60-year-old working man who has retirement assets of $411,440.  He is saving $24,000 per year, with an estimated average investment return of 8%.  Assuming his retirement goal is $4,000 per month, with Social Security kicking in at age 65 ($1,640 per month), this is how he will fare:

If he retires at age 62, this man’s assets will be depleted at age 77.  If he retires a mere three years later at age 65, he is covered until the age 90.  If he retires at age 67, his assets will not be depleted until he is 102 years old.  A few additional years of working can make a big difference in providing coverage throughout your lifetime.

Get Help

Planning your retirement requires many considerations.  A financial advisor can help integrate your retirement strategy in a comprehensive financial plan to help you best meet your long- and short-term goals.


Hypothetical example provided for illustrative purposes only.  Does not take into account transactions fee’s 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/or your 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