Delaying retirement increases income during retirement significantly
By delaying retirement for a couple of years, you can significantly increase the amount of your pretax income during retirement. I found this interesting graph (reproduced - I couldn’t find an electronic version) courtesy T. Rowe Price. Read the assumptions below the graph carefully.
Assumptions: Portfolio returns 8% before retirement; 6% after. Taxes and inflation effects are excluded. Assumes a $150,000 nest egg at year zero.
To me, those are some pretty surprising results. Coincidentally, I just got that annual ’statement’ from the Social Security Administration. One know, the one where they estimate your benefit at full retirement and if you defer a few years.
In both cases, it’s pretty stark how much of a difference 5 years makes. Another illustration of the magic of compounding, I guess.
graph, nest egg, pretax income, retirement, social security administration t rowe price
May 15th, 2007 at 10:43 am
May 15th, 2007 at 3:18 pm