Is retiring at 65 looking unlikely? Here’s how to decide whether to delay retirement

For a long time, the standard narrative for retirement was straightforward: work until 65, the benchmark age to collect retirement benefits set by the Social Security Act of 1935, then retire. Later came the rise of the early retirement movement. Now, a new trend is gaining momentum — delaying retirement.  

For some, it's a choice to stay in a career they love, but for others, the reality is that their savings simply aren't where they need to be by 65. While delaying retirement can offer financial benefits, it comes with risks and potential drawbacks that you need to consider.  

While the full retirement age — the age at which you can start collecting Social Security benefits — ranges from 65 to 67, depending on when you were born, you're not required to retire by then. In fact, you can choose to delay retirement for a variety of reasons — whether it's because you haven't saved enough to comfortably support yourself, or because you genuinely enjoy your work and want to keep going.  

Waiting longer to retire can also come with financial perks. For example, delaying Social Security benefits past your full retirement age can increase your monthly payout by up to 8% each year until age 70. Pension benefits may also grow depending on your plan's rules and how long you continue working. 

It's also important to note that while it's possible to rely on Social Security as your main income source, it's generally not recommended." Many of these people live in constant fear of the next big expense, and many ultimately have to rely on family simply to get by," says Tyler Meyer, CFP® and founder of RetireToAbundance.com. 

Delaying retirement isn't for everyone. Working longer can take a toll on your physical and mental health, especially if your job is demanding or stressful. It may also mean missing out on time to travel, pursue hobbies or spend time with loved ones.  

And while delaying Social Security can boost your monthly checks, you're also forgoing years of benefits you could've collected earlier — which may not pay off if you don't live long enough to break even. So, using the same example from above, if you delay claiming Social Security until age 70 instead of 67, your monthly benefit may be hundreds of dollars higher but you'd need to live into your early 80s for the larger checks to make up for the years of missed payments.  

Whether or not you delay retirement is a personal decision— one that's best made in consultation with a financial planner. Before making any choices, it's important to consider what you envision for your retirement and whether your current savings can support those goals. If you plan to travel a lot or support children or grandchildren, you'll likely need a larger financial cushion. On the other hand, if you envision a quieter lifestyle with fewer expenses, you may need less. 

To estimate your retirement expenses, you can use the 4% rule — a popular rule of thumb to determine sustainable withdrawals. It suggests you can safely withdraw 4% of your retirement savings in your first year of retirement, then adjust that amount each year for inflation. In other words, it helps you estimate how much you can spend each year without depleting your savings too quickly.  

For example, with $1 million in savings, you'd withdraw $40,000 in the first year. Then, to account for inflation, you'd increase your withdrawal the next year — so if the cost of living rises by 3%, you'd take out $41,200.  

Some people delay retirement because they haven't saved enough, want to continue working or aim to maximize their Social Security benefits. However, if health challenges begin to limit your ability to work, postponing retirement may not be the most practical option. 

Even if you want to delay your retirement, life doesn't always cooperate. You could face an unexpected layoff, or health issues may make it difficult to keep working, forcing you to rethink your timeline. So, what can you do if retirement comes earlier than expected? There are still ways to earn income and stay engaged. 

Meyer recommends what he calls "phase-out retirement." This could involve working part-time, transitioning to a less demanding job or taking on seasonal work as you ease into full retirement. 

"Rather than one day working full-time and the next day being completely retired, easing into retirement gives you a chance to 'test drive' the lifestyle," he says. 

Not only can this approach help financially, but it can also provide emotional benefits. 

"It can help with the emotional side of the transition, allow you to stay engaged a little longer if you enjoy your work, and reduce the risk of feeling bored or disconnected once you're fully retired." 

However, if you have a 401(k) with a previous employer and decide to work part-time for a different company, you might consider rolling over your 401(k) into an IRA. This move can give you more control over your investments, broader fund options and potentially lower fees.  

Major brokerage firms like Charles Schwab and Fidelity offer Rollover IRAs with user-friendly platforms, robust research tools and a wide range of investment choices—including stocks, bonds, ETFs, and mutual funds. Both also provide access to financial advisors and retirement planning resources.

If your retirement savings are falling short, you're not alone. Many Americans are realizing their nest egg might not stretch as far as they hope — especially with rising costs of living and longer lifespans. One place to start is by looking at where your cash is sitting. Is it in a high-yield savings account? Many people still keep their money in traditional savings accounts, which often earn below the national average — sometimes as little as 0.01% APY. But by switching to a high-yield savings account, you could earn significantly more interest.  

High-yield savings accounts from online banks like Ally, Marcus by Goldman Sachs, American Express and Synchrony offer rates around to 3% to 4% APY, with no monthly fees or minimum balance requirements. While they won't replace long-term investments like 401(k)s or IRAs, they're an easy way to earn more on your emergency fund or near-term savings while maintaining access to your cash.  

At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Tyler Meyer, CFP® and founder of RetireToAbundance.com.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of investing products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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