How could postponing your retirement by just five years transform your retirement picture? David McKnight shares mathematical reasons that could help.
Reason #1 is compounding. As David explains, “When you delay retirement, your money has more time to grow.”
The second reason for considering the postponement of your retirement has to do with the fact that an extra 5 years would give you more time to save.
Reason #3: Worried that your money won’t last as long as you do? Just remember that it doesn’t need to last as long.
If you retired at 65 and lived to 95, you’ll need your retirement savings to last 30 years.
In case you were to retire at 70, then you’d only need your savings to last 25 years.
The fourth reason for postponing retirement is a potentially higher withdrawal rate.
David touches upon the 4% Rule.
The rule states that if you’d like to have a higher chance of lasting a full 30-year retirement, you should never take more than 4% of your day #1 retirement balance, adjusted every year thereafter for inflation.
Studies show that your new sustainable withdrawal rate would be closer to 5%.
The final mathematical reason to delay retirement is to “boost your Social Security benefit.” It’s important to know that every year you delay Social Security after full retirement age, your benefit increases by about 8% until age 70.
Since Social Security is guaranteed, and inflation-adjusted, that becomes a reliable, predictable stream of income that complements all of your other streams of retirement.
Mentioned in this episode:
David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track
PowerOfZero.com (free video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
My Favorite Murder with Karen Kilgariff and Georgia Hardstark
My Favorite Murder is a true crime comedy podcast hosted by Karen Kilgariff and Georgia Hardstark. Each week, Karen and Georgia share compelling true crimes and hometown stories from friends and listeners. Since MFM launched in January of 2016, Karen and Georgia have shared their lifelong interest in true crime and have covered stories of infamous serial killers like the Night Stalker, mysterious cold cases, captivating cults, incredible survivor stories and important events from history like the Tulsa race massacre of 1921. My Favorite Murder is part of the Exactly Right podcast network that provides a platform for bold, creative voices to bring to life provocative, entertaining and relatable stories for audiences everywhere. The Exactly Right roster of podcasts covers a variety of topics including historic true crime, comedic interviews and news, science, pop culture and more. Podcasts on the network include Buried Bones with Kate Winkler Dawson and Paul Holes, That's Messed Up: An SVU Podcast, This Podcast Will Kill You, Bananas and more.
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