Many Americans are considering working longer as a way to supplement their retirement income. A survey conducted by CNBC and SurveyMonkey found that 27% of workers intend to work in retirement to shore up their nest egg. However, retirement experts warn that relying on working longer to support oneself in old age may not always be feasible. Unexpected health complications or layoffs could derail this plan, leaving individuals struggling to make their retirement savings last.
According to the survey, many workers retire earlier than anticipated, with a significant portion citing hardships such as health problems or layoffs as the reason for their early exit from the workforce. This highlights the potential risks of relying on working longer as a financial strategy for retirement. A study by the Urban Institute found that more than half of full-time workers in their early 50s are pushed out of their jobs before they are ready to retire, often leading to a substantial decrease in income if they find new employment.
Despite the challenges associated with working longer, retirement experts acknowledge that there are benefits to continuing to work past the traditional retirement age. Delaying drawing down savings can help keep the nest egg intact longer and may lead to further investment growth. Additionally, delaying Social Security benefits can result in higher payouts later on. Some individuals also choose to work in retirement because they enjoy it, with a significant portion of retirees continuing to work in some capacity.
Research suggests that working longer may also have non-financial benefits, such as improved health and longevity. However, the extent of these benefits may depend on the nature of the work and the level of stress involved. As the economy shifts towards a focus on services and information, more older workers may find it feasible to continue working to an older age. This trend may provide opportunities for individuals to extend their working years and improve their financial security in retirement.
While working longer may seem like a viable solution to bolster retirement savings, retirement experts caution that relying solely on this strategy may not always be realistic. Unexpected circumstances such as health issues or layoffs could derail plans to continue working into old age. It is essential for individuals to have a comprehensive financial plan that considers various scenarios and incorporates strategies beyond simply working longer. By diversifying their retirement income sources and diligently saving, individuals can better prepare for unforeseen challenges and ensure a secure financial future in retirement.
