I’m 63 years old, have $800K in savings and I was all set to retire in four months — but now I’ve just got a fantastic new job offer. Should I take it or stick to my plan?

How will taking the new job impact your retirement savings?

When you take a big pay cut, obviously you’re not going to be able to save as much for retirement as you would at your current job. However, with only four months left to go until you stop working, chances are good that you weren’t going to be adding much to your nest egg anyway.

In fact, by delaying when you start drawing from your retirement accounts, you can end up in a much better place financially.

Your money can stay invested and keep benefitting from compound growth instead of you beginning to make costly withdrawals. You can also delay claiming CPP and keep increasing your monthly benefit until as late as 70 years old, which could more than double. Instead of receiving $800 per month at 60, you will receive $1,775 at 70. That’s a big increase, on top of the fact you’ll also be growing your invested funds.

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How much income do you need to live on?

You’ll also need to consider how much income you need to live the lifestyle you'd like to live in retirement. While your new job may provide an income similar to what you’ll earn in retirement, continuing to work rather than being at home can come with added costs.

You may have more commuting expenses, for example, although that should be negligible with the office just five minutes from your house. However, you may also be more likely to buy lunch at work or need costlier work clothing, which can mean you need a little more money.

At the same time, keep in mind that working longer will likely increase the income you eventually have as a retiree. If you have more of a cushion to live on in your later years because you take this new job, you may be better off — especially given uncertainty around the nation's economic prospects in the near future.

Would retirement make you happier than working?

Your happiness matters when it comes to retirement decisions. If you have been looking forward to retirement and don’t want to spend more years working, then you should likely not put off quitting even if the perfect job comes along. Especially if you already have enough money to retire.

And with 30% of retirees being at risk of becoming socially isolated, it may be prudent to take a new job if it will help you maintain social connections. You can always work on your golf game on the weekends.

You should carefully consider all of these issues as you decide what’s right for you. An unexpected change in circumstances can be shocking when you had plans in place, but it may just end up being a blessing that makes your future retirement a much more enjoyable one.

Sources

1. Government of Canada: Deciding when to start your public pensions