financial crisis makes it crucial to consider delaying. “If your 401(k) tanked,
you will be leaning on Social Security
even more.”
; Finally, you reduce your out-of-pocket health care costs. Not many
employers still offer retirement health
coverage, so if you retire before 65 you
may face stiff private insurance costs
until Medicare kicks in. “The longer
you can hold on to employer health
benefits, the more you’ll help preserve your retirement savings,” says
Richard Johnson of the Urban Institute’s Retirement Policy Center.
also recommends making big-ticket
purchases while you have the income
to cover them. And stay alert to market headwinds. If T. Rowe Price’s 7
percent preretirement and 6 percent
postretirement return assumptions
look dicey after a few years, you may
have to adjust by diverting more of
your income into savings again, or
trimming your expenses, or even delaying retirement by a year or more.
Can you really count on keeping
your current job all the way to 70?
Even if your employer is willing, your
health may have other ideas. If you
think that you’re hale enough to go
the distance, and secure in your posi-
tion, practice retirement could be a
possibility. “You have to take a look at
your current job circumstances and
ask yourself what is the likelihood you
will be with that employer at age 67,”
Sass says. “If you do change jobs, you
will probably lose money.”
But don’t forget that you can safely
earn less than you once did. Since you
are no longer diverting 10 or 15 per-
cent of your salary into savings, you
can bring home 10 or 15 percent less
and still maintain the same quality of
life. The aim is simply to resist tapping
your savings and Social Security bene-
fits until you are deep in your 60s.
Which brings us to the true benefit
of working to a later age: options. One
option is to have fun and spend more
in a practice retirement. Another is to
earn less money and take your foot off
the career gas—or do work that’s more
meaningful to you. As long as you’re
still earning your living, the choice is
yours. And with a Plan B like that, who
really misses Plan A? ;
Carla A. Fried is a freelance journalist
specializing in personal finance. She has
written for Money, The New York
Times, and CBS Money Watch.com.
It’s crazy not to save during your
60s. What if the market collapses?
What if you get sick? What if you
lose your job?
Working longer gives you the chance
for some immediate gratification in
your 60s, but it’s not a free ticket to
fiscal irresponsibility. Don’t stop contributing to your 401(k) if your employer provides a match, for example;
instead, dial back your contributions
but keep saving enough to qualify
for the maximum match. Otherwise
you’re essentially passing up free
money. Don’t drag debt into retirement. If you carry credit card balances, pay them off before you get into
practice retirement’s live-it-up mode.
(Then keep them paid off.) Fahlund
Photo Credits
Inspire Awards Pages 46–51: Jane Goodall: producer, Sarah Tesla/MAKe Productions. Andy Czerkas:
wardrobe stylist, Alicia Robinson/Zenobia Agency.
Pat Summitt: hair and makeup, Kimberley Thomas.
Irene Zola: wardrobe stylist, Mindy Saad for Celestine
Agency; hair and makeup, Tiffany Patton. Hilton
Kelley: wardrobe stylist, Rona Lamont/Zenobia
Agency. Arizona heroes: producer, Alan Benoit/ The
Reel West; wardrobe stylist, Melanie Hebron Sutton/
Zenobia Agency; hair and makeup, Margarita Potts/
Zenobia Agency. Emilio Estefan: groomer, Georgina
Del Pino. Big 5-Oh Page 64: Jim Carrey: reference
photo, Corbis; Sam Robards: Sonia Recchia/Getty
Images; Sean Hannity: Nancy Kaszerman/Newscom;
Alison Arngrim: Angela Weiss/Getty Images; Patricia
Wettig: Frazer Harrison/Getty Images; Stephen
Hawking: Newscom; Muhammad Ali: Michael
Buckner/Getty Images.
Social Security: Patience Pays
YOUR SOCIAL SECURITY BENEFITS revolve around your Normal Retirement Age (NRA)—
the age at which you are entitled to 100 percent of your benefit. If you were born in 1960
or later, your NRA is 67. If you were born from 1943 to 1954, your NRA is 66, and if you were
born from 1955 to 1959 your NRA is somewhere between 66 and 67. If you wait until your
NRA or later to claim your benefit, you’ll receive much higher monthly payments.
How much bigger
your benefit will be
if you defer claiming
your benefit until
your NRA
Additional annual
benefit increase
between your NRA
and 70
How much bigger your benefit will be if you wait until
70 to start receiving Social
Security, compared with
taking payouts at 62
If your NRA
is 66…
If your NRA
is 67…
25%
8%
76%
30%
8%
77%
A new AARP online calculator will give you a personalized snapshot of how waiting can
balloon your Social Security benefit. Go to aarp.org/socialsecuritybenefits.
It’s a Numbers Game
The 13 would go below the line. All the numbers
above the line can be turned upside down and
still be read as numbers.
A O S L M NE
Solutions to puzzles on page 53
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Pyramid Scheme
The eight words are
COWL, COWS, CONS,
CONE, CANS, CANE,
CAME, and CAMP.
