The Hidden Costs of Delaying Retirement
If you’re considering working a few extra years before retiring, you might assume it’s the best financial decision. On paper, delaying retirement makes sense: you get to save more money, increase your Social Security benefits, and let your investments grow. However, there’s a significant cost associated with waiting—your time.
Many people come to us with a set retirement age in mind, only to push it back at the last minute. They think, “Just one more year,” believing that another year of income and savings will make them more financially secure. But what they don’t realize is that delaying retirement could actually cost them more in lost time and experiences than the extra financial security is worth.
The Financial Trade-Off: More Money vs. Less Time
The Numbers Always Look Better on Paper
Every additional year you work means:
- One more year of salary
- More retirement contributions
- A higher Social Security payout
- Shorter time your savings need to last
On paper, this seems like an obvious win. But life isn’t just about numbers—it’s about time. Time is the one resource you can’t get back. No amount of money can buy back the lost years you could have spent enjoying your retirement.
Time is Your Most Valuable Asset
Think about the phases of retirement:
- The Go-Go Years (late 50s to early 70s): You still have the energy to travel, explore new hobbies, and do the things you’ve always wanted to.
- The Slow-Go Years (mid-70s to late 80s): You’re still active but not as energetic. You travel less and slow down.
- The No-Go Years (late 80s and beyond): Health declines, and activities are limited.
The longer you delay retirement, the fewer Go-Go Years you’ll have. You might retire with a larger savings account, but if you’re too old or too tired to enjoy it, what was the point?
Why People Delay Retirement (And Why They Shouldn’t)
Fear of the Unknown
One of the biggest reasons people delay retirement is simple—fear. Fear of running out of money, fear of not knowing what to do with their time, and fear of making the wrong decision. But what if that fear is costing you the best years of your life?
Chasing an Arbitrary Savings Goal
Many people set arbitrary savings targets, like $1 million in a retirement account, even when they don’t actually need that much. For state employees, pension and Social Security benefits often cover most of their needs. Every extra dollar saved beyond that is just extra security, not a necessity.
“Just in Case” Syndrome
People keep working because they’re afraid of “what ifs.”
- What if I need more money?
- What if something unexpected happens?
- What if I get sick?
But reality shows that many retirees don’t actually spend as much as they think. They live within their means, and those extra savings often sit untouched.
The Freedom of Early Retirement
You Can Always Work Again If You Want To
Many early retirees don’t stop working entirely—they just work on their own terms. They find part-time jobs, start small businesses or volunteer. The difference is that they choose to do it rather than being forced to.
Health Benefits of Early Retirement
Studies show that reducing stress and focusing on activities you enjoy can lead to a longer, healthier life. Early retirees often prioritize their health, exercise more, and spend more time with family, all of which contribute to longevity and happiness.
The Math: How Delaying Retirement Costs You
Example: Retiring at 60 vs. 65
Let’s say you plan to retire at 60, but you’re considering working until 65 instead.
- If you retire at 60, you have five extra years of freedom.
- If you retire at 65, you may have a higher retirement savings balance, but you’ve sacrificed five years of your best retirement phase.
- Even if you earn an extra $100,000 per year for five more years, you’re trading $500,000 for five years of your life.
What’s worth more to you—money in the bank or time to enjoy your life?
Making Early Retirement Possible
1. Know Your Numbers
Most Washington State employees have a pension and Social Security, which already provide a solid income floor. Once you understand how much you actually need each month, you may realize you’re already set.
2. Plan for Your Expenses, Not an Arbitrary Savings Goal
Instead of aiming for an arbitrary number, plan around your real expenses. If your mortgage is paid off and you don’t have major bills, you might not need as much as you think.
3. Consider Life Insurance for Your Inheritance Plan
If your goal is to leave money to your children, life insurance is a smarter way to do it. It provides a tax-free payout, so you can spend your retirement money guilt-free.
4. Work With an Expert
Many people don’t realize they can retire early until they talk to a professional. We’ve helped hundreds of people retire years earlier than they expected—on average, we add 930 days (2.5 years) to our clients’ retirements!
Conclusion
Delaying retirement may seem like the safer option, but it comes at a significant cost—your time. The best years of your retirement are in the early years when you still have your health, energy, and freedom to enjoy life. Instead of focusing solely on growing your savings, consider what you might be sacrificing by working longer.
If you’re a Washington State employee, your pension and Social Security already provide a stable financial foundation. It’s time to stop delaying and start living.
FAQs
1. How do I know if I can afford to retire early?
If your pension and Social Security cover your basic expenses, you may already be in a position to retire earlier than you think. A financial review can help you determine your readiness.
2. Will retiring early reduce my Social Security benefits?
Yes, retiring before full retirement age will reduce your monthly Social Security benefits. However, if you’ve saved enough and have a pension, this reduction may not significantly impact your lifestyle.
3. What if I get bored in retirement?
Many retirees find new hobbies, part-time work, or volunteering opportunities. The key is to retire from your job, not from life.
4. Should I withdraw from my retirement accounts early?
It depends. If you have a pension, you may not need to touch your savings immediately. A financial planner can help you create a withdrawal strategy that makes sense for you.
5. How can I maximize my pension benefits?
Choosing the right payout option and timing your retirement wisely can make a big difference. Speaking with a retirement expert can help ensure you get the most out of your benefits.
P.S. Join our free community and gain exclusive access to expert financial insights, personalized tools, and step-by-step guidance tailored for Washington State employees. Start your journey today and take control of your financial goals—it’s completely free!
