The pandemic ushered in a new era in the financial markets. It brought extreme volatility, overvalued meme stocks, and abundant liquidity.

It also turned up the heat on the economy, inviting elevated inflation and one of the most aggressive tightening campaigns in the Fed’s history.

To say these events justify reassessing your retirement strategy would be an understatement.

Over the next few minutes, you’ll learn why it might be wise to consider delaying retirement in 2023. Spoiler: It's not just about money.

Reason #1: More time to earn

Working longer allows you to continue earning a steady income. This provides your savings with more ammunition, ensuring more funds are available when you do eventually stop working.

Individuals can earn and accumulate substantially more money by working a few additional years. These additional years can help you clear large debts like a mortgage.

That extra income can also allow you to pursue other financial objectives outside of retirement, like helping pay for your grandchildren to attend college.

Besides, economists are sounding the alarm about an economic downturn. While fears somewhat subsided in recent months, the New York Fed still pegs the odds of a recession next year at over 60%.

If this does occur, any additional income could prove increasingly valuable.

Reason #2: More time to grow savings

“Compound interest is the eighth wonder of the world.” - Albert Einstein

Delaying your retirement gives you more time to contribute to your retirement account which means more time for it to grow.

As long as you’re working, you delay depleting your retirement savings through recurring withdrawals. As a result, returns have a chance to compound based on a larger asset base.

Reason #3: Financial peace of mind

For many, stopping work and losing their employment income is nerve-racking. This is particularly true for those unsure they have sufficient retirement savings.

Continuing to work can alleviate this stress and give you a longer period to accumulate savings. Ultimately, this added buffer can help ease you into a post-work life with less anxiety.

Reasons #4: Recover from 2022

There’s no denying the markets beat up pensions and retirement portfolios in 2022. After falling 17%, last year was the S&P 500’s first double-digit annual loss since the Great Recession in 2008.

To make matters worse, bonds also took a severe hit. In fact, 2022 was the worst year for Barclay’s U.S. Aggregate Bond Index since they began keeping records in 1976.

Because many savings accounts experienced substantial drops in value last year, it might be prudent for some near-pensioners to reconsider working a bit longer to recover from the shortfall.

Reason #5: Higher potential benefit payout

In many countries, the U.S. included, the longer you work and the older you are at retirement, the higher your benefit payout. If you desire a larger monthly Social Security check, consider putting your retirement date on pause.

For example, in the U.S.:

  • Retiring at 62 results in a 30% lower payout than waiting until the full retirement age of 67.
  • Each year delayed above age 67 results in 8% added to your social security benefits.

Reason #6: Wait until you’re eligible for Medicare

By delaying retirement until age 65, Americans can ensure they receive full Medicare coverage. This means once you stop working, you can rely less on often prohibitively expensive private health insurance.

Furthermore, retiring before you’re eligible for Medicare coverage risks potentially paying substantial out-of-pocket costs should a medical emergency occur.

Employers also often sponsor health benefits. By terminating employment, you might lose valuable coverage. Some employers do offer health benefits into retirement, but they are becoming increasingly less common.

Reason #7: Maintain social network

Sadly, retiring often means losing meaningful connections to friends you’ve worked with for decades. It’s not unusual to spend more time with your colleagues than you do with your own family.

In short, those people can be a vital part of your social network. In fact, they might even be the only people in your social network.

Retirement can sometimes bring a rapid distancing from the people you once spent hours with each day. For social butterflies, losing this network can be devastating.

On top of that, the last few years have seen a deterioration of in-person connections.

Lockdowns, social distancing, and work-from-home arrangements mean we see less of each other. As a result, retiring in 2023 can have an even more significant impact on your social network than it did in the past.

Consider speaking with a financial advisor

If you’re strongly considering delaying retirement, the best thing you can do is talk with an advisor. This is even more important if you’re concerned you might not have sufficient funds to cover expenses once you're not working.

A financial advisor can walk you through various scenarios tailored to your situation. They possess the expertise and experience to navigate this complex and emotional topic.

Taking this step ensures you’re making informed decisions and sets you on a path toward a secure and comfortable retirement.