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June 23, 2013

The new retirement: It's later now

(Continued)

— Savings on health care costs. Employer subsidized health insurance is one of the primary reasons many people stay in the workforce.

— Increased retirement benefits. For those eligible to receive a monthly pension annuity, additional years of service may increase the monthly lifetime benefit.

— Larger nest egg and fewer withdrawals. Employees who participate in 401(k) type plans can make additional tax-deferred contributions and allow their investments to grow for a longer period. Also fewer years of withdrawals means your nest egg will last longer.

— Larger Social Security benefits. For each year you delay taking Social Security benefits after your full retirement age (and up to age 70), you will increase the benefit you receive by about 8 percent. It is nearly impossible to find a safe investment that yields such an outstanding return. These larger checks will improve your (and your spouse’s) retirement security, especially in old age when you may need it most.

For many, economic well-being is only part of the argument for working longer. Studies on healthy aging conducted by researchers at leading universities and think tanks support the notion that working later in life offers physical, psychological and emotional benefits to older people. The reasons are simple. First, interesting work requires that individuals utilize their social skills and cognitive abilities, which help them retain them longer. Second, a person’s desire to work, contribute their talents and be appreciated allows them to maintain a sense of purpose. In other words, it’s a great reason to get up in the morning.

John Spoto is the founder of Sentry Financial Planning in Andover and Danvers. For more information, call 978-475-2533 or visit www.sentryfinancialplanning.com.

This article is for general information purposes only and is not intended to provide specific advice on individual financial, tax, or legal matters. Please consult the appropriate professional concerning your specific situation before making any decisions.

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