Most Americans turning 65 between 2024 and 2030 are not financially prepared for retirement. Do this if you fall into that category | The Motley Fool

In the coming years, the U.S. workforce will undergo quite a remarkable change as baby boomers retire en masse. During the period 2024 to 2030, about 30.4 million Americans will reach age 65, an age often associated with retirement. And while, in one respect, that could open up opportunities for younger members of the workforce, it could also be the start of a major financial crisis among older people.

More than half of Americans turning 65 between 2024 and 2030 (52.5%) have assets of $250,000 or less, according to a study commissioned by the ALI Retirement Income Institute. This means that many near-retirees are at risk of depleting their savings over the course of their lives or experiencing financial difficulties.

Image source: Getty Images.

If you’re nearing age 65 and worried about the state of your nest egg, there’s an important move you can make to save your retirement. And while it may not be the easiest option to move on from, it’s one you can appreciate for many years after the fact.

Agree to work longer hours

If you’re approaching retirement and have $250,000 or less to your name, you may be in for a world of financial turmoil. A nest egg of $250,000 might seem like a lot of money until you apply the 4% rule to that balance, leaving you with an annual retirement income of just $10,000 from savings. And that’s assuming you even have $250,000. If you have half, your savings can only give you $5,000 a year.

That’s why it’s important to accept the reality of your situation and consider a delayed retirement. If you were initially thinking of ending your career at age 65, delay that milestone until age 70. If you were going to work until age 67, save retirement until age 72.

To be clear, this advice should not apply to people whose jobs are actually harmful to their health. But if you’re not overwhelmingly miserable at work and can manage your job for a few more years, delaying retirement could do wonders for your financial prospects.

Remember, Americans are living longer these days, so ending your career in your early 70s could still mean 20 years of retirement ahead of you. At the same time, you can retire with more money if you delay exiting the workforce not only because they add to your existing savings, but also, just as importantly, it leaves your nest egg empty for a few more years.

You can benefit from a Social Security point of view

Delaying your exit from the workforce can also leave you with more Social Security to enjoy. You can collect your full monthly benefit based on your individual earnings history at full retirement age (FRA). If you turn 65 between 2025 and 2030, your FRA is 67. If you were born in 1959, you are 66 and 10 months.

Meanwhile, your monthly Social Security benefit gets a boost for every year you delay your claim beyond FRA until age 70. So if you’re eligible for $2,000 a month with an FRA of 67, you’ll work until you’re 70 and claim benefits. increase your monthly payments to $2,480. That’s an extra $5,760 a year in Social Security to help offset a nest egg that might not be so robust.

If you’re close to 65 with plenty of savings, retire when you want. But if you know your nest egg still needs work, consider delaying retirement to some extent. If you can only hang on for one more year, so be it. And if you can wait a little longer, you may find that instead of retiring in precarious financial circumstances, you can retire with more financial confidence.