NEW YORK (MainStreet) More Americans are holding off on retirement until they reach their seventies. A recent research paper published by the Center for Retirement Research (CRR) at Boston College reveals that Social Security's real retirement age is now 70.
The driving factor: Social Security's delayed retirement credit, which causes benefits to increase 8% per year every year an employee defers claiming benefits beyond full retirement age up to age 70.
"When people wait until age 70 to retire, they end up getting a lot more money from this really good income that is inflation-adjusted and goes on for as long as people live," says Alicia Munnell, the center's director and author of the study.
Delaying your Social Security benefits has the potential to increase the total amount of income you'll receive throughout your lifetime by $100,000 or more. In addition, several other factors are making age 70 an increasingly attractive age to leave the workplace.
You can add a full year's salary or more to your savings
Moving your retirement age from 65 to 70 can provide substantial payback. If you are saving, say, 20% of your income for retirement, then pushing your retirement back five years will add a full year's salary to your savings. The extra time also allows an extra five years to let investments grow on a compounded basis.
"Delaying retirement gives you the option of working longer and that does three wonderful things: you have greater Social Security benefits each month, you shorten the period you need to support yourself on your retirement assets and it leaves time for your 401(k) to generate additional contributions and earnings on balances," Munnell says.
Furthermore, for married couples, waiting to collect Social Security benefits until age 70 for at least the higher earner runs the potential to boost a household's lifetime earnings by hundreds of thousands of dollars.