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You can catch up on retirement savings easier than you think

Just implement this simple strategy.

Do you wish you’d saved an extra 1% of your salary over the past 30 years? No doubt many people feel that way. You can’t turn back the clock – but it’s still not too late. Here’s what you can do:

Postpone retirement a few months (or years).

A National Bureau of Economic Research working paper found that working an extra three to six months has the same economic impact as saving an extra 1% for 30 years.* Here are four reasons why postponing retirement works:

  1. By working a little longer, you delay filing for your Social Security benefits. Every year you do that, your benefits increase by about 8% until age 70.
  2. The longer you work, the more you will contribute to your 401(k) or other workplace retirement plan, and the more matching contributions you may get from your employer.
  3. Delayed withdrawals from retirement accounts result in additional compounding of account balances.
  4. Delayed annuity purchases result in lower annuity prices.

The overall benefit is twofold: The more you delay retirement, the more money you may end up with, and the less of it you’re likely going to need. And the best part is that it’s unlikely that you’ll have to incur a huge delay in retirement.

So don’t feel dejected if you didn’t save more in the past. Instead, recognize that it’s not too late if you get started now.


* Bronshtein, G., et al. (2018, January). The Power of Working Longer. National Bureau of Economic Research. www.nber.org/system/files/working_papers/w24226/w24226.pdf

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