5 guidelines when deciding how long to work before retiring

Consider the pros and cons of working and not working when about to retire—also have a fallback strategy ready if you realize you need to go back to work.

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Balancing retirement income, debt and assets are major concerns when planning for retirement, according to the Consumer Financial Protection Bureau. About 10,000 baby boomers are retiring every day at an average age of 62 and should plan to live another 25-30 years. Unexpected events and lifestyle spending concerns are on their minds. How long should you plan to work before retiring?

There is no “right” answer for everyone about making this decision.

Five guidelines are suggested by the “Using Work to Your Advantage” lesson from the National Endowment for Financial Education (NEFE) Retirement Planning workshops:

  • Work at least to full retirement age (FRA). If your health is good, strive to work until 66 or 67 to take advantage of higher Social Security payments, increased savings and health insurance coverage from your employer.
  • Make sure the option you choose is affordable. One suggestion is to practice living on your estimated retirement income to see if it is realistic.
  • Plan ahead. Likely you will need to spend much less in retirement. Some expenses may be higher. You should also factor in inflation.
  • Consult with available advisors. Before you finalize your decision, talk to human resources staff, a career counselor, or a financial advisor to be informed about the options and their consequences.
  • Know the implications. Many retirees pay income taxes on up to 85 percent of their Social Security benefits when they have other significant income.

Your values are also part of the decision about how long to work before retiring. Beyond the financial concerns, think about what you will do in retirement and where you will live. Make a list of what is very important to have, nice to have and unacceptable. This will help you understand your personal criteria and boundaries when making this decision.

To fill gaps, returning to the workforce during retirement can be the solution. Reasons include:

  • Needing extra income or using less savings and assets
  • Higher Social Security benefits if not already claimed
  • Social interaction or avoiding boredom
  • Passing on skills to younger workers

Decisions about when to stop working before retirement might impact retirees long-term. This is especially true when they have no new sources of income. Consider the pros and cons of working and not working when thinking long term. What is the best balance? Also, have a fallback strategy ready if you realize you need to go back to work. Intentional decision-making and continuous planning should be made about many retirement issues.

The Social Security Administration has more information on how long to work before retiring. Besides work considerations, investigate valuable information about Social Security, health costs, savings and investments, retirement plans, housing, debt, fraud and long-term care insurance.

Financial planning takes time, patience, and discipline. Be sure to check out MIMoneyHealth.org for great tips on many financial topics plus programs in the Events column from Michigan State University Extension.

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