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Should You Work Till You’re 70?

More and more, the targeted retirement age for many people is 70, for numerous reasons. A U.S. News
and World Report article,Why You Should Plan to Work Until Age 70, has some excellent information
that may be useful for younger and older workers alike.

Contrary to what you may be thinking, it’s common for some people to work until 70 or older for reasons
completely unrelated to finances.

But even if you choose to work until 70 for other reasons than money, the reality is that you’ll likely
notice some positive economic impacts from your decision. So, if you keep working because you feel
great and still enjoy your work, you can consider those economic impacts as mere fringe benefits of your
decision.

The first potential benefit of working longer is a bigger Social Security check. Social Security payments
rise by about eight percent for every year you delay filing between age 62 and 70. Here’s an example.

A person who would receive $750 a month at age 62 — which is earlier than the full retirement age —
would get $1,000 a month at age 66. Prety good jump, right? But if that same person waits to file until
they’re 70, their monthly payment will rise to $1,320 a month.

Furthermore, the value of your annual cost-of-living adjustment, when there is one, would also be larger
because those annual inflation-determined increases are based on your current payment amount.

Ultimately, if you’re in good health, have a family history of longevity, and still enjoy your work, holding
off until 70 to file for Social Security may make plenty of sense. Also bear in mind that once you turn 70,
your benefit will no longer increase, which means there’s likely no incentive to waiting past age 70.

Focusing on age 70 for retirement also provides you with a longer runway for saving money.

Because your salary may be at its highest point once you’re in your 60s, and because your children are
probably out of the house or close to it, you may be able to contribute more money to your various
retirement accounts. And if you’re able to pay off your mortgage a handful of years before you retire,
there’s another opportunity to save even more money for retirement.

Don’t forget that older workers also receive special tax breaks. Thanks to the catch-up contribution rule,
in 2024, those 50 and older may contribute $8,000 to an IRA, which is $1,000 more than their younger
counterparts.

That same catch-up rule applies to 401(k)s. In 2024, workers 50 and older can contribute an extra $7,500
to their 401(k), for a grand total of $30,500.

Delaying retirement until you’re 70 also provides advantages because by waiting to retire you’re also
delaying when you begin taking withdrawals from your retirement accounts and savings. And that means
the money in those accounts can potentially keep growing.

However, be sure to discuss required minimum distribution, or RMD rules, with your financial services
professional. Those rules stipulate when you must begin taking withdrawals from your account, so you
don’t face penalties.

Finally, delaying your retirement until you’re 70 means you’ll have a shorter retirement to fund. While
nobody knows how long they’ll live, the sooner you retire, the more non-working years you need to
cover financially. If you retire at 62 and live to 90, that’s 28 retirement years you need to have the money
for. But if you retire at 70 and live to 90, that’s just 20 years you need to account for.

SOURCE
htps://money.usnews.com/money/retirement/articles/2012/07/09/why-you-should-plan-to-workuntil-age-70
https://www.kiplinger.com/taxes/higher-ira-and-401k-contribution-limits-next-year
https://www.investopedia.com/retirement/401k-contribution-limits/

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