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Thinking about working beyond normal retirement age? Think twice.

Concerned you have not saved enough for retirement? Working longer and postponing retirement may solve several concerns – employed people continue to earn income and have a longer time frame to build their nest egg; also, during the time they are working, they are not drawing down funds from that nest egg as they would if they were retired. The third advantage comes if they decide to delay collecting Social Security benefits. An individual who waits until age 70, for example, collects an extra 32% in benefits compared with someone claiming Social Security at their normal retirement age of 66. On paper, it looks like a good idea. The problem is that for many people, life doesn’t work out according to plan.


Unforseen Health Problems

Two new surveys bear this out. The first, from the Employee Benefit Research Institute, found that 50% of retirees in its 2014 survey stopped working earlier than they had anticipated. Of those, 60% cited health problems or disability, 27% pointed to changes at their company and 22% said they had to retire to care for a family member. The other survey, conducted on behalf of the New York Life Insurance Co., found that 51% of the retirees it polled wished they had retired sooner. On average, they would have wanted to retire four years before they actually did.


Take Control

“What the survey shows is that retirees, if given the opportunity, would want four or five years at the front end of their retirement when they are healthy, most active and able to get the most out of their retirement savings,” said David Cruz, senior managing director at New York Life Knowingly taking a chance by assuming that you will have the opportunity — and inclination — to work into your later years, you might think twice about taking such a risk and try to save more before you reach normal retirement age.


While the idea of retirement is grand, there are still numerous challenges to overcome. With escalating health care costs and people living longer than ever, it seems the savings target for a secure retirement is moving beyond the reach of many Americans.


No one likes to plan for the worst — in this case not being able to work as long as one would like — but at the same time, people have to be realistic. “If you have a choice, take control of what you can control, and don’t defer the pain until later, when you have zero control over whether you’ll continue to work or not,” said Jack VanDerhei, EBRI’s director of research. Of course, if it turns out that you are able to work beyond 66 and you want to, all the better. You will have a bigger nest egg and will likely enjoy your retirement that much more after they call it quits.