As of 2022, the average retirement age among Americans was 61, according to a Gallup poll. And it’s common for people to leave the workforce in their early or mid-60s.
If that’s always been your plan, then you may not love the idea of working until 70 — at least at first. But here are a few good reasons to consider extending your career until your 70th birthday.
1. You can set yourself up with more Social Security
You’re allowed to claim Social Security at any age starting at 62. And you’re eligible for your complete monthly benefit based on your unique wage history once full retirement age arrives. That age is 66, 67, or somewhere in the middle, depending on your year of birth.
But Social Security rewards people who delay their claims past full retirement age. For each year you do, up until age 70, your monthly benefits get an 8% boost.
Put simply, if you’re entitled to a $2,000 benefit at age 67, waiting until age 70 could leave you to collect $2,480 a month instead — for life. That’s a huge difference.
Now it may be possible to retire at an earlier age than 70 and simply hold off on Social Security until that point. But you’ll generally need a lot of savings to make that happen. If you’re not loaded with savings, you may need to continue working until age 70 to make a Social Security filing at that age possible. But doing so could set you up with a much larger benefit for the remainder of your retirement.
2. You have a prime opportunity to boost your savings
Many people get a late start in building savings. If that’s what happened to you, then it pays to work until age 70 so you get a few more years to add to your 401(k) or IRA.
Even if you’re investing conservatively at that time so that your portfolio is only giving you a 6% return, if you contribute $500 a month to a retirement plan for three extra years, you’ll pad your nest egg to the tune of $19,000. Make it $800 a month, and you’re looking at almost $30,600 extra. Either sum could cover a large expense you might incur in retirement, like a major home repair or a dream vacation.
3. You can stretch your existing savings to take the pressure off
Even if you’re unable to add to your savings during your last few years in the workforce, holding down a job until age 70 could serve the very important purpose of allowing you to leave your existing nest egg untapped. One very tricky thing about retirement planning is that it’s impossible to know how long yours will last.
But let’s say you end up living until age 90. If you retire at 65, the savings you have need to last for 25 years. If you retire at 70, you only need that money to last 20 years, which takes some of the pressure off and potentially allows you to take larger monthly withdrawals once you are done with work.
A strategy worth considering
It may not be the easiest thing to get on board with the idea of working until age 70. But the upside could be huge.
And remember, if you can’t imagine staying at your current job through age 70, you could always do a late-in-life career shift or join the gig economy and make your money that way. You don’t necessarily need to earn the same income late in your career as you did during the bulk of it. You may just need to earn enough money to be able to delay Social Security, pad your nest egg, or at least avoid dipping into your savings so you get more flexibility down the line.
