Do you think, “Bas ek aur saal, yaar?” If you are thinking of delaying retirement by one year, there is much more to it than you would expect. Taking that little extra time at the workplace can have significant financial implications, especially on your retirement nest egg and lifestyle. Let’s explore and see why pushing the retirement plans by a year makes all the difference.
Better Returns for Better Reserves
He is Rajesh, 59-year-old accountant, from Kolkata. He pushed his retirement a year ahead and thus retired at 61, instead of at 60, when he would have anyway become a retired person. He started freelancing with small and medium-sized companies after leaving his corporate job. He is now getting ₹4,00,000 more every year than before. His work remains flexible, and a steady income pours into his life.
This strategy works well if you are planning to take a personal loan in Kolkata to cater to all those expenses while saving more for your future. Why? It lets you focus on building your retirement fund without immediately breaking into it.
More Time for Investments to Grow
Sunita, a school teacher by profession, if she delayed her retirement by one more year, then her savings would have benefited from increased time to multiply. A better result of more time for investments to mature would translate into a greater retirement fund for her.
If she delays retirement by 2 years and earns ₹6,00,000 per annum, she shall add ₹12,00,000 to her savings. That extra time for growth will support her in enjoying a comfortable retirement.
Less Retirement Time Means Lesser Withdrawals
“Retirement abhi door hai, boss!“ Pushing back retirement means that you spend one less year relying on your savings. This reduction stretches your retirement funds further, and you do not have to worry about outliving your resources.
For example, here is the case of Arvind, estate agent, who postponed his retirement by one year. He had saved for retirement and had already saved ₹20,00,000. In that additional year he did not touch that sum and added another ₹4,00,000 to the savings account. His retirement was thus much more relaxing.
Risks to Consider Before Delaying Retirement:
Before you go around saying, “Ek aur saal toh chalta hai,” consider the risks:
- Health Risks: With time, people may become health-conscious. If by staying put in your job your health gets affected, it might not be worth it.
- Â Work Pressure: Any kind of job can prove to be stressful and demanding. So, make sure your job isn’t too much to handle and that financial rewards are greater than the stress at work.
- Â Inflation Risks: While you may be actively trying to save for your retirement, inflation probably erodes part of it.
Balancing the Decision with a Budget Plan
A smooth transition depends on striking a balance between the decision to postpone retirement and a financial plan. Here are the advantages and disadvantages:
| Advantages | Disadvantges |
| More time to grow savings and investments | Increased work stress and delayed leisure time |
| Pay off outstanding debts like loans | Risk of not being able to enjoy retirement fully |
| Build a stronger financial cushion | Possible impact on health and personal life |
| Extra income to fund retirement needs | Less time for family or personal pursuits |
Frequently Asked Questions
1. How much will a one-year delay in retirement cut into my retirement savings?
It isn’t much at all; thanks to compound interest, extra earnings also help the rest of your savings grow.
2. How will the deferred retirement affect my Social Security or pension benefits?
Delaying retirement increases the amount of most retirement plans’ monthly benefits. For most pension and Social Security plans, the effect of delaying your withdrawals is to increase your benefits. So, this has some advantages to it.
3. What are the risks of delaying my retirement?
Delay retirement as much as possible to save as much as you can, but there will be factors such as your health, the stress of your job, and inflation. If you continue your job, you may be unable to do so due to long hours at work or health issues. Also, be cautious when making this decision.
4. How much would I pay off debt with one more working year?
Another year will bring you more opportunities to pay off all your debts, for instance, balances on your credit cards or loans. Less debt retiring will allow you to be versatile in your finances and avoid high-interest pay on these loans.
