Originally published March 2016. Last updated March 2026.
One extra year of work doesn’t sound like much. But financially, it can be one of the most impactful decisions you make. Here’s why.
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1. One Less Year of Withdrawals
A 30-year retirement requires your savings to stretch further than a 29-year retirement. Sounds obvious, but the math adds up. If you spend $60,000/year from your portfolio, working one more year means $60,000 you don’t need to withdraw, plus whatever you save during that year.
2. Compound Growth on Your Savings
If you have $500,000 in retirement accounts and earn an 8% return during your extra year of working, that’s $40,000 in growth. Plus whatever you contribute: if you’re over 50 and maxing out your 401(k) at $31,000, that’s $71,000 of additional value in one year.
And you’re not withdrawing during that year, so the full balance keeps compounding.
3. Higher Social Security Benefits
Social Security is calculated on your 35 highest-earning years. If you’re still earning, an extra year of high income might replace an earlier, lower-earning year in the calculation, boosting your benefit.
More importantly, if you’re between 62 and 70, each year you delay claiming increases your benefit by 6-8%. At full retirement age (67 for most), your benefit is 100% of the calculated amount. Claim at 62 and it’s only 70%. Delay to 70 and it’s 124%.
4. Continued Employer Benefits
One more year of work often means:
- Employer health insurance (potentially saving $10,000-$25,000 in premiums vs. individual coverage)
- Employer 401(k) match (free money)
- Continued life and disability insurance
- One more year before you need to bridge the gap to Medicare at 65
When It Doesn’t Make Sense
- Your health is declining and working is making it worse
- You hate your job and it’s affecting your quality of life
- You’re already well past your savings target and one more year won’t change your plan
- You have a spouse who needs care and your time is more valuable at home
FAQ
What if I can only work part-time?
Part-time work still helps. Even earning $30,000-$40,000 reduces how much you withdraw from savings. And if your employer offers benefits to part-time workers, you still get some of the insurance advantages.
Does working longer affect my Social Security if I’ve already claimed?
If you claimed before full retirement age and earn above $23,400 (2025), some benefits are temporarily withheld. They’re not lost forever, though. Your benefit is recalculated at full retirement age to account for the withheld months.
Schedule a free 20-minute consultation to model what one more year of work means for your retirement plan.
R.L. Brown Wealth Management
106 W Vine St, Suite 300, Lexington, KY 40507
859.317.5889
