When You Retire Really Matters

As baby boomers start hitting age 65, putting off retirement for a few years has become all the rage. But even if you're pessimistic about your financial prospects, you may not need to wait as long as you might think to retire securely.

Americans' opinions are quite negative about their retirement prospects. A survey from Wells Fargo (WFC) found that a quarter of the people it surveyed believed they'd need to work until they're 80 to be financially comfortable. Three-quarters expect to work during their retirement years, and while some of those are people who simply want to keep working, the majority say they'll need to do so to cover necessary expenses or to keep up their standard of living.

Yet a new study from the Center for Retirement Research paints a more positive picture for prospective retirees. The news wasn't all good, as the study found that fewer than half will be able to retire at 65.

Workers should take heart, though, because for many of those who can't afford to retire at 65, just a few more years of work will make a huge difference. The study noted that by age 70, 86% of households should be financially prepared.

What's the Difference?

Putting in a few extra years on the job has a number of positive impacts on your finances. Consider:

• An extra year of paychecks covers living expenses for that year, keeping you from having to tap your nest egg.
• Working longer also lets you put more of your earnings aside, boosting your savings even further.
• If your employer provides health insurance, it can save you a bundle versus paying your own premiums. Other employee benefits can also help.
• An extra year of work between ages 62 and 70 lets you defer Social Security benefits, increasing your eventual monthly check by about 8% per year when you finally take it.

Even with these positives, there are still some big reasons to worry. When you hit your 60s, Social Security may no longer provide the same level of benefits that current law gives retirees. Moreover, even if you want to work, you may not be able to find a job that gives you everything you need.

Nevertheless, for those who do have control of their careers, the decision of when to retire really makes a big difference. The right choice can give you a lot more confidence about your financial future.

For more on making the most of your retirement:

• Stop Low Interest Rates From Ruining Your Retirement
• How People Just Like You Planned Their Way to a Rich Retirement
• The Battle Over Public Pensions Heats Up

Gallery: The 10 Worst States for Retirees in 2012

Motley Fool contributor Dan Caplinger has no idea when he'll decide to retire. He owns no shares of the companies mentioned above. You can follow him on Twitter here. The Fool owns shares of and has created a covered strangle position in Wells Fargo. Motley Fool newsletter services have recommended buying shares of Wells Fargo.

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