5 Good Reasons to Delay Retirement

Barbara Marquand | guest writer for GoTalkMoney

The dream of retiring while still young and fit enough to enjoy it is fading for a growing number of people hit hard by the tough economy.

Roughly a third of Americans worry they won't have the means to finance their retirement, according to a recent survey by the Pew Research Center's Social and Demographic Trends Project.

And many who already have reached retirement age are putting it off. About a third of working adults 62 and older say they already delayed retirement, the survey found, and about 60 percent of workers in their 50s report they might have to work longer than they had planned.

Other studies show similar worries. About 60 percent of adults recently polled by Allianz Life Insurance Co. said they were more afraid of outliving their income than dying.

Perhaps what's most troubling is the fear of running out of money appears to be well-founded.

In a recent analysis, the Employee Benefit Research Institute projected a disturbing portion of Americans will be short on savings after retirement. Almost two thirds of Americans in the two lowest preretirement income levels will be short of money after 10 years of retirement, and a third of people in the next-highest income level will be short after 20 years in retirement. Even upper-income folks aren't immune -- 13 percent of them will face money shortages 20 years after they retire, the institute reported.

The decision to delay retirement might trigger disappointment, perhaps deep disappointment, at first. But it's not the end of the world. Here are five reasons delaying retirement might not be such a bummer after all:

1. Bigger Social Security Monthly Benefit

The longer you work, the bigger your Social Security monthly benefits will be.

If you retire early, the monthly benefit amounts are smaller to account for the longer period you receive them. When you retire later, you get benefits for a shorter period of time but the monthly amounts are bigger to make up for the time you didn't receive anything.

2. More Time to Fund Retirement Investments

Working even just a couple more years will help you offset losses to your portfolio when the economy tanked. The more time you work and save, the bigger your nest egg will be.

The federal government lets you put in extra money to catch up on retirement if you're 50 or older. This year that means you can add an extra $5,500 to your 401(k) -- on top of the $16,500 you're already allowed to contribute -- and another $1,000 on top of the $5,000 contribution limit for a traditional or Roth IRA. For a SIMPLE IRA, you can add in another $2,500 on top of the $11,500 limit.

3. Save Money by Not Withdrawing from Investments

Continuing to work means you don't draw from your retirement savings, which preserves your nest egg, allowing it to grow. You save tens of thousands of dollars just by not withdrawing from investments for a year or two.

4. More Time to Pay Off Mortgage

Consider working a few extra years to pay off your mortgage before you retire, if you haven't already done so. Remove debt to lower your expenses and give you greater financial freedom once you're ready to quit working.

5. Work Satisfaction

Retirement isn't always what it's cracked up to be. A University of Maryland study that tracked 12,000 workers ages 51 to 61 found that people who scaled back, but continued to do some work in their field were happier and healthier than those who stopped working completely. Those who only scaled back their work reported fewer major ailments like heart disease and depression. If you still need some income, but perhaps not your full salary, consider downsizing your job to reduce stress but maintain connection to your career and satisfaction from contributing.

Delaying retirement might not be what you dreamed for yourself at this age, but using the time effectively to save and preserve investments will help you feel secure when it's finally time to call it quits at work.

Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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