Why delaying it may be the most surefire way to prepare

Inflation is extremely stressful, not only because of the higher costs now, but also because of what it means for our future. This is a huge concern for savers in retirement, as the rising cost of living means they will need a bigger nest egg to cover all their expenses. And some find it difficult to save anything for retirement.

Saving more for retirement often means diverting a larger percentage of your income to retirement savings, but this can be a challenge for most people, especially with record inflation. Fortunately, there is another way to increase your savings without taxing your budget more today, but it comes at a cost.

How to save more and reduce your retirement expenses

Delaying retirement helps you save more by giving you more time to save. You can continue to live off your paychecks and put some aside for retirement. In the meantime, the money you’ve already invested for retirement will continue to grow. You could suffer losses, especially during a recession, but if you don’t touch your retirement savings, chances are they will rebound when the market recovers.

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Pushing back your retirement date also makes your retirement shorter and, by extension, less costly. If you originally planned to retire at age 60 and live to age 85, you should save enough to cover 25 years of living expenses, plus a cushion for any unexpected costs that may arise. But if you delay retirement at age 65, you only have to save for 20 years of retirement. If you plan to spend about $50,000 a year in retirement on average, delaying your retirement by five years could lower your savings goal by $250,000.

And you don’t have to put off your retirement that long to make a difference. Even a few months’ delay could give you the financial leeway you need to retire comfortably. But it all depends on how much you have already saved and how far you need to go. Only you can decide how long you think you have to wait.

Other ways to get the money you need

Delaying retirement won’t appeal to everyone, and for some, it’s not always feasible. If you become unable to work, lose your job, or have to care for a sick family member, you may not be able to delay your retirement even if you want to. There are other options, but they may not work as well in all cases.

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First, you might be slowly moving into retirement. Rather than quitting the job market all at once, you could gradually reduce your work hours until you are fully retired. This way, you don’t have to deplete your retirement savings as quickly. However, not all employers will allow this. If not, you may need to choose a different strategy or consider another job as you transition into retirement.

You can also build your nest egg faster by starting a side hustle, negotiating a raise at your current job, or changing employers if you find a better deal elsewhere.

You can also use a combination of these strategies if you prefer. The important thing is to develop a plan that you think will provide you with the money you need for your retirement. If you’re worried that your savings will run out, it’s best not to retire just yet.

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