3 Signs You Should Wait 1 More Year Before Retiring
Key Points
Working longer could help you retire debt-free.
It could pay to wait if the market isn't on your side.
You need a plan for filling your days before leaving a full-time job.
- The $23,760 Social Security bonus most retirees completely overlook ›
At some point in your career, you may feel ready to narrow down a specific retirement date. You may, for example, decide at age 57 that based on your current retirement savings balance, you'll be comfortable ending your career at 62.
But it's important to be flexible with those plans, because rushing into retirement at the wrong time is a decision that could hurt you in the long run. And in some cases, working just a bit longer could help you retire more confidently. Here are three signs that you should delay your retirement by a year.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
1. You're still carrying debt
It's not an absolute rule that you have to retire debt-free. But if you're able to, it could make your life less stressful.
When you're on a fixed income of retirement plan withdrawals and Social Security, the more money you have to allocate to debt payments each month, the more squeezed you might feel. So if working another year makes it possible to retire debt-free, it could be worth doing -- especially if the debt is of the high-interest variety, like a credit card balance.
2. The market just took a dip
When you set a retirement date in advance, it's impossible to know what stock market conditions will look like at the time. But if the market takes a dive right as you're planning to retire, and your portfolio has lost value as a result, it could pay to work another year and wait out a recovery.
If you retire right away and are forced to start tapping your portfolio for income, you may end up having to sell investments at a loss or lower price, putting yourself at a higher risk of eventually running out of money. If you wait a year, your investments might come back up in value so that tapping your IRA or 401(k) isn't a problem.
3. You don't yet have a game plan
It's easy to assume ahead of retirement that you'll enjoy having your days to yourself without the stress of a job. But retirement can be quite boring if you end up with too much downtime. And that's not a good feeling, as too much boredom could impact your mental health.
If you don't have any clue as to how you'll spend your time once you retire, then it may be best to keep working while you figure things out. You can spend those 12 months exploring different options, whether it's enrolling in classes, joining local social clubs, or even setting yourself up to consult part-time for extra money and mental stimulation.
Retirement represents a major change -- financially and logistically. There's nothing wrong with planning for a certain retirement date ahead of time. But it's also important to assess the situation once that date arrives. And if you're still carrying debt, dealing with a market downturn, or at a loss for how to fill your days, then delaying retirement a year is worth considering.
The $23,760 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.
One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.
View the "Social Security secrets" »
The Motley Fool has a disclosure policy.
Recommended Articles
