Early retirement is all the rage these days, and people are doing it at increasingly younger ages. If you're tired of your job, or have specific things you want to do before aging takes its toll, then retiring early may seem like an appealing move. But before you rush to exit the workforce, consider these compelling reasons to hold out a bit longer.
1. You haven't saved enough
Social Security on its own won't provide enough income for you to live comfortably. If your earnings were average, your benefits will replace about 40% of your former income. Most seniors, however, need about double that amount to pay for more than just basics. In other words, if you want to travel at all, dine out, do activities, and enjoy small luxuries like cable TV, you'll probably need far more than 40% of your pre-retirement earnings. Therefore, if you haven't saved much money for your golden years, it pays to wait on retiring and instead work longer to boost your nest egg.
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Imagine that working an extra two years allows you to add $20,000 to your nest egg. If you take annual 4% withdrawals from savings in retirement, which many experts recommend, that'll give you an extra $800 a year. That may not seem like a lot, but it could be enough to buy you a modest getaway or even a year's worth of cable. Remember, too, that holding off on retirement allows you to leave your existing savings untouched for longer.