Delayed Retirement and Money Problems

No one wants to be forced to retire by age or health problems. Conversely, no one wants to be forced to delay a planned retirement. Unfortunately, that is the case for many over-60 baby boomers. Money is the number one reason.

< According to a Career Builder survey of over-60 workers who have decided to delay retirement, 72% say that the reason is financial. They do not feel they have enough money to support themselves if they stop working.

Also, 27% of business personnel managers report being approached by older workers who want to delay a scheduled retirement.

Reality hurts.

Source: Over 70% of workers delaying retirement cite money woes.

So what does one do to overcome this “too broke to retire” problem? For many, it’s a matter of making up for lost time.

Forbes published a recent article on what to do if you are over-50 and a late starter on retirement saving. The advice is typical and not ground-breaking. It applies also to folks who are older and need ways to save to generate more retirement income.

Having a specific savings goal is important in these situations. Just thinking “I have to wait – I need more money” is not particularly helpful or motivating. It’s actually depressing.

I would first estimate how much more retirement income you need. (See my article on a Simple Way to Determine Retirement Readiness. FYI – this article was a featured selection in the “Best of the Best in Money and Personal Finance #12.“)

As a simple example, let’s assume that you are 62 years old and have created a retirement spending plan. From that, you estimate you will need to find an additional $800 in monthly income to comfortably retire.

Instead of retiring and taking Social Security at age 62 as you had originally planned, you decide to wait until age 66, your full retirement age.  That alone could add another $500 to your monthly income, all from Social Security.

What about the other $300 monthly income shortfall  - where will that come from? How much more savings do you need to provide that?

At current rates, a 66 year-old can purchase an immediate annuity providing $300 in monthly income for life for a lump sum cost of about $45,000. (I’m not saying that you must buy an annuity. Rather, this is an easy way to establish a realistic savings goal.)

To accumulate $45,000 in four years, run the numbers through a simple savings goal calculator. In our simple example, and assuming a 4% return, you would need to find an additional $880 in monthly savings to reach your retirement income goal. That may not be easy to do but it at least gives you a target to shoot for.

There are other options to a delayed retirement forced by financial problems. One of those options is a phased retirement, perhaps including taking a different job with less stress and greater contentment.

The key is doing something. Floundering around or giving up completely – as so many boomers seem to have done – will make things worse.


  1. Peter Bateman says

    I was surprised to see the annuity information indicating $300/month–or $3600 annually–on an annuity purchase of $45,000 for a 66 year old. That is a guaranteed yield of 8%–very tough to achieve these days(as other calculations in Go to Retirement post dated March 18 using a 4% return assumption would confirm) Granted, the $45,000 is gone forever if you die, and not there for your heirs, and there is certainly no compounding of the return on investment.

    I have not yet requested personal quotes for annuities because I assumed rates of return would be quite a bit lower than 8% at this time in our economy. However, for the situation my wife and I are in, not needing or able to worry about kids or grandkids and simply wanting to make retirement investing easy and less time consuming than it is now as we actively manage our investments, annuities sound very appealing.

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