Five Mathematical Reasons to Delay Retirement by Five Years

How could postponing your retirement by just five years transform your retirement picture? David McKnight shares mathematical reasons that could help.  Reason #1 is compounding. As David explains, "When you delay retirement, your money has more time to grow." The second reason for considering the postponement of your retirement has to do with the fact that an extra 5 years would give you more time to save. Reason #3: Worried that your money won't last as long as you do? Just remember that it doesn't need to last as long. If you retired at 65 and lived to 95, you'll need your retirement savings to last 30 years. In case you were to retire at 70, then you'd only need your savings to last 25 years. The fourth reason for postponing retirement is a potentially higher withdrawal rate. David touches upon the 4% Rule.  The rule states that if you'd like to have a higher chance of lasting a full 30-year retirement, you should never take more than 4% of your day #1 retirement balance, adjusted every year thereafter for inflation. Studies show that your new sustainable withdrawal rate would be closer to 5%. The final mathematical reason to delay retirement is to "boost your Social Security benefit." It's important to know that every year you delay Social Security after full retirement age, your benefit increases by about 8% until age 70. Since Social Security is guaranteed, and inflation-adjusted, that becomes a reliable, predictable stream of income that complements all of your other streams of retirement.     Mentioned in this episode: David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free video series) @mcknightandco on Twitter  @davidcmcknight on Instagram David McKnight on YouTube Get David's Tax-free Tool Kit at taxfreetoolkit.com