How Beneficial is Working Longer and Delaying Retirement?

Question: How beneficial is working longer and delaying retirement?

My first car was a 1973 Chevrolet SS Nova. We purchased the car when I was 14 for a couple of grand because it needed significant bodywork, and we planned to do all the work ourselves over the next couple of years before I was eligible for a driving license. I loved that beautiful car! It was UT orange with two black stripes up the middle. I’ve heard a few times in my life that you can’t judge a book by its cover, and this car was an example of the truth of that phrase. 

We worked on the car for hours, stripping off the paint in the driveway in anticipation of a new paint job. Unfortunately, each section of the vehicle we stripped uncovered a new curse waiting for us underneath. Any car enthusiast would appreciate our dismay as we found loads of Bondo and rust in almost every body piece. The harder we worked, the more work we realized this project would require. Too bad we had school and jobs keeping us from focusing on getting the car restored, and we ended up selling it to someone with more time to devote to it. Luckily, we only lost our time and not our money, but the time was well spent learning a few life lessons and a little about car restoration.

I have a friend who had the opposite experience restoring his classic Chevelle. This car looks brand new, outside and inside, and runs like a top. It’s obvious the attention to detail that’s been put into this remodeling project, and I’m not even sure how many hours have been devoted to it. But my friend is passionate about fixing it up just right, cutting no corners, and he’s rightfully proud of the result. He and his wife decided to retire a few years ago, and it never gets old hearing their stories about the pursuit of fun, exciting things like fixing up their classic cars and traveling. I remember hearing only one regret: not quitting a stressful position sooner.

This story reminds me of many discussions about the value of working longer and delaying retirement. The long journey of saving for retirement will end for most of us, and for some investors, staying put longer will undoubtedly help. Delaying retirement has obvious perks like more money to spend later, additional time to pay debts off, and employer-provided benefits like health insurance before Medicare eligibility. However, continuing to work in a stressful job can also have negative consequences on your health, and it can reduce the number of years you have to enjoy the nest egg you’ve accumulated. If you quit too soon, you may be unable to maintain your lifestyle. If you wait too long, you’re potentially giving up years of good physical health to travel and spend time with family.

There are many statistics about retirement timing in our population. Studies show around two-thirds of all current retirees retire by age 62, and it’s no surprise that’s the earliest age you are eligible for reduced Social Security benefits. For the healthiest demographic of recent retirees, 70 was the most common age due to strategies for maximizing Social Security benefits. Among all current retirees, the most common retirement age is 65, corresponding to the age of Medicare eligibility. The COVID pandemic also affected retirement behavior, with some choosing to take that early retirement package but even more deciding to delay retirement further. Numbers like these are sometimes helpful to paint a picture of how others make decisions, but at the end of the day, your decision is unique and very personal.