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More than one in 10 American workers approaching retirement age are postponing their retirement plans due to the current high rate of inflation, according to a new study from the Nationwide Retirement Institute. This percentage could become even larger if inflation continues.
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Before deciding if you should postpone your retirement, there are a few things you need to consider. The most important thing is whether you have enough money saved. This is an important consideration in any economic environment, but it’s especially important when the inflation rate is at 7.9% and possibly rising.
As GOBankingRates previously reported, once you reach age 60, many financial experts recommend that you have seven times your annual income saved for retirement. Others say the amount should be eight times higher.
If you haven’t saved that much, or are way below that, you’re probably better off keeping working and earning money until you can put your retirement savings in the right place. This is especially important when the prices of almost everything are skyrocketing. On the other hand, if you’ve saved a lot more than the experts recommend, you should have a big enough nest egg to weather high inflation until it stabilizes again. In this case, retiring now will not be as problematic.
Another priority is to pay off as much debt as possible to ensure you don’t start your retirement in a big money pit. Most retirees live on a fixed income — usually a combination of Social Security benefits and retirement savings such as 401(k) accounts. It’s hard enough to pay bills in normal times, let alone when inflation is approaching historic highs. You don’t want a mountain of debt to eat up your money even more.
Postponing retirement in a time of high inflation also makes sense if you reach an age where you can register for Social Security benefits. You can do this at the earliest at 62 years old. But since your benefits increase the longer you wait to collect them, it may be better to continue working until you reach full retirement age, which can be 66 or 67, depending on your date of birth. . This extra money will be useful if inflation rates remain high.
You can also delay filing for Social Security beyond full retirement age, increasing your benefits even further, The Motley Fool reported. For each year of waiting until age 70, your benefits increase by 8%.
Finally, think about what your life will be like once you leave the workforce. If you love your job, there’s no reason to quit it — and the income it provides — by retiring before you really need it. The money you earn at work will stand you in good stead in today’s inflationary environment, allowing you to pay your bills with less stress and continue to save money in your retirement account.
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