Should I Postpone My Retirement?

Recent financial difficulties have many Americans wondering what it all means to them. A question that may be top of mind for many nearing retirement is, "do I need to work longer and postpone my planned retirement?" Deciding when to retire is a tough question, particularly in turbulent economic times. 

Though there are several factors you need to consider, the fundamental question you need to answer is whether you will have, at a minimum, enough lifetime income to cover your basic living expenses.  The following worksheet will help you analyze your situation. 

Income/Expenses

Do you know what your basic monthly living expenses will be in retirement? Yes o No o

Do you know what your monthly income will be in retirement? Yes o No o

The following is a summary chart of retirement income and basic living expense items. Complete the chart to estimate your monthly income and expenses.  For a more comprehensive review, complete the attached detailed income and expense worksheet at the end of this article.

Do the math
Subtract the monthly expenses from your income.

Total Income__________ - Total Expenses_________ =   _____= _______

If your calculation produces a negative number, you should probably consider continuing to work or at least work part-time. If your calculation produces a positive answer, you know that your basic living expenses are essentially covered.  Again, be sure that the income you’re using is going to last you a lifetime.  You want to have the peace of mind that these basic expenses will be covered for the rest of your life.  In addition to basic expenses, you may also want to consider the lifestyle expectations you have.  For example, are you okay cutting back on the "nice to haves" such as vacations, dining out, entertainment, and gifts?  If not, you may want to continue working to build more assets so you have the flexibility to spend on those items during retirement.