retirement planning  |  september 7, 2021

Should I Delay My Retirement? What Are the Potential Benefits?

Waiting to retire—even by just a few years—could have a big impact on your future financial security.


Key Insights

  • Delaying retirement results in fewer years in which your savings will need to support you.

  • Waiting until full retirement age or later to claim Social Security can lead to higher benefits.

  • Whether you’re able to delay your retirement or not, staying flexible with your retirement spending can help keep your finances on track.

Judith Ward, CFP®

Senior Retirement Insights Manager

Since the early 1990s, the average age at which workers say they expect to retire has risen from 57 to 66.1 There are likely many factors behind this trend, including the rise in full retirement age (FRA) for Social Security, but today’s preretirees may also have to factor in the financial impact of the coronavirus pandemic on their retirement planning. Some workers may choose to continue working past their planned retirement date due to increased economic uncertainty, while others may end up retiring early—whether by choice or because they have lost their job.

If you have a say in when you retire and are considering working longer than planned, know that there are some potentially significant advantages to postponing retirement for another two to three years. “There are definitely benefits to staying in the workforce a little longer, especially if you can work until age 65 or your full retirement age,” says Judith Ward, CFP®, a senior retirement insights manager with T. Rowe Price. “Some of these benefits are financial; others may be emotional.”

The Financial Benefits of Delaying

There are many potential financial benefits to delaying retirement a few years, particularly if that means waiting until your FRA. (See “FRA by Year of Birth.”) These benefits are largely intertwined and often influence each other. They include:

Fewer Years to Rely on Savings

One of the largest financial benefits of delaying is shortening the amount of time your savings will need to support you in retirement. Stretching your savings across even two or three fewer years has a positive effect on the probability that you won’t outlive your funds.

FRA by Year of Birth

It’s important to keep in mind that FRA varies by age.

Full Retirement Age based on Birth Year
Year of Birth Full Retirement Age
1943-1954 66
66 and 2 months
66 and 4 months
66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 and later


Consider the hypothetical example of a 62-year-old who earns $110,000 per year and has $900,000 set aside for retirement. If he retires this year, there is just a 40% chance that he will not outlive his funds in retirement, based on projections generated by the T. Rowe Price Retirement Income Calculator.* The likelihood of not outliving one’s retirement funds is what we refer to as the “probability of success.”

If he delays retirement by just a few years (until age 65), his probability of success rises to 77%. Waiting just one more year, to age 66, increases that probability to 84%, which is within T. Rowe Price’s target confidence zone of 80% to 100%. “The improvement in this hypothetical scenario assumes no additional contributions to the investor’s retirement account after age 62,” says Ward. “Delaying retirement is that powerful.” (See “The Power of Waiting.”)

If the same hypothetical preretiree continues to make annual retirement contributions equal to 10% of his salary ($11,000) while delaying his retirement, his probability of success would increase even more, although only by a few percentage points: 80% at age 65 and 88% at age 66. “The continued contributions move the needle a little in the confidence zone,” says Ward. “It may be OK to use that money to shore up other financial areas prior to retirement if that helps you to stay in the workforce for a few more years.”

The Power of Waiting

The improvement in the probability of retirement success is significantly increased by delaying retirement for just a few years. In this scenario, the hypothetical investor has an estimated $67,722 in annual living expenses in retirement. Due to the combined impact of increased Social Security benefits and a decrease in how much retirement savings he will need to withdraw each year, the longer he waits, the greater his chances of success in retirement.

The improvement in the probability of retirement success is significantly increased by delaying retirement for just a few years.

*The Retirement Income Calculator uses Monte Carlo analysis to generate 1,000 hypothetical scenarios based on inputs such as, but not limited to, performance of various asset classes, saving and spending assumptions, a client’s time horizon, life expectancy, income and expenses and other variables. The Monte Carlo analysis provides ranges of potential future outcomes based on a probability model. The Monte Carlo simulation runs the user’s scenario 1,000 times, so for example if 600 of those runs are successful (i.e., all goals are funded and you have at least $1 of assets remaining at the end), then the Probability of Success would be 60%, and the Probability of Failure would be 40%.

For purposes of this illustration a Moderate allocation (60% equity, 40% bonds) was used, and these allocations are assumed to be rebalanced annually to remain consistent. Additionally, the investor is assumed male, single, residing in Colorado with a date of birth of January 1, 1959. 90% of the assets are in qualified retirement accounts. For details on this and other assumptions, please read our Methodology and Assumptions.

The information provided in this tool is for general and educational purposes only and is not intended to provide legal, tax, or investment advice. The assumptions and methodology are not tailored to the needs of any specific investor. Results are intended as an aid, are not guaranteed, and should not be your only source of information when making financial decisions. Other T. Rowe Price educational tools or advice services use different assumptions and methods and may yield different results.

IMPORTANT: The projections or other information generated by the Retirement Income Calculator regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. The simulations are based on assumptions. There can be no assurance that the projected or simulated results will be achieved or sustained. Actual results will vary with each use and over time, and such results may be better or worse than the simulated scenarios. Clients should be aware that the potential for loss (or gain) may be greater than demonstrated in the simulations.

1Gallup Survey 2020.

Important Information

This material has been prepared for general and educational purposes only. This material does not provide recommendations concerning investments, investment strategies, or account types. It is not individualized to the needs of any specific investor and is not intended to suggest that any particular investment action is appropriate for you, nor is it intended to serve as the primary basis for investment decision-making. Any tax-related discussion contained in this material, including any attachments/links, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or tax professional regarding any legal or tax issues raised in this material.

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