5 Signs Retiring Now Could Cost You More Than Waiting Would

You might think you're in the clear to retire after decades of work, but there are a few things to consider before stepping back from full-time work. One of the biggest financial mistakes is retiring before you're financially ready. Even leaving work one year earlier than planned could put a strain on your savings, which follow you throughout retirement.

Here are five signs you're better off waiting at least another year to retire.

You're retiring before Medicare starts at 65

Health insurance could be your biggest reason to delay retirement if you're under 65 and covered by your employer.

The enhanced Affordable Care Act (ACA) premium tax credits expired at the end of 2025, bringing back the federal subsidy cutoff at 400% of the federal poverty level. KFF found that a 60-year-old earning $65,000, just over that limit, now pays an average of $10,389 more a year toward marketplace premiums.

If you're 64, working 12 more months could keep you on employer coverage until Medicare begins.

Medicare isn't free, though: the standard Part B premium is $202.90 per month in 2026, and beneficiaries may incur additional costs for prescription coverage, deductibles, and other services. Still, Medicare may be cheaper than purchasing private coverage on your own. Enrollment generally opens three months before your 65th birthday month.

You're still carrying expensive credit card debt

High credit card interest rates will erode your savings and retirement income, making expensive debt a priority to address before leaving work. According to AARP, 42% of adults ages 65 to 74 carried credit card balances from month to month. Among adults 50 and older carrying credit card debt, 28% owed at least $10,000.

Another year of work could give you more income to pay down those balances before relying on your retirement savings. Given that the average interest rate on new credit card offers now stands at 23.96%, getting out of debt must be a priority during your final working years. At rates that high, reducing expensive debt could do more for your retirement finances than adding another year of investment contributions.

Your investments just suffered a significant loss

A market downturn shortly before retirement deserves attention, especially if you'll need to start withdrawing money from your investments immediately. This is known as a sequence-of-returns risk. Charles Schwab explains that losses early in retirement are particularly dangerous because withdrawals leave less money invested to benefit from a subsequent recovery.

In one of Schwab's hypothetical examples, two retirees started with $1 million and followed the same initial withdrawal plan. The investor who suffered 15% losses in each of the first two years exhausted the portfolio in roughly 18 years. The investor who experienced those losses later still had nearly $400,000 after 18 years.

Working another year might help you avoid withdrawing money while investments are down. However, waiting doesn't guarantee a market recovery. If you already have sufficient cash reserves, retiring after a downturn may still be reasonable.

Another year of work would close a meaningful savings gap

One more paycheck won't solve every retirement savings problem, but 12 months of contributions could make a difference if you're close to your goal.

For 2026, the IRS allows eligible workers to contribute up to $24,500 to a traditional 401(k), plus an $8,000 catch-up contribution for those 50 and older. Workers ages 60 through 63 have a higher $11,250 catch-up limit.

There's also Social Security to consider. The Social Security Administration says claiming before the full retirement age of 67 permanently reduces monthly benefits. Waiting to claim increases the monthly amount until age 70. Working longer could also replace a lower-earning year in the 35-year earnings history used to calculate your benefits. Remember that you don't have to claim Social Security when you stop working.

You haven't figured out how you'll pay your bills

If your retirement plan consists mainly of an account balance that looks large enough, you're missing an important series of calculations.

Before retiring, identify your expected spending, guaranteed income, and how much you'll need to withdraw from investments. Include property taxes, insurance, healthcare, groceries, home maintenance, and occasional expenses such as vehicle replacement.

The Consumer Financial Protection Bureau warns that retirement expenses don't always decline, particularly when healthcare costs and outstanding debt remain. You should also know which accounts you'll draw from first and how your spending would change during a prolonged market downturn.

If you can't answer those questions, spend some time building a written plan before leaving work.

Why waiting too long to retire might be costlier

There are also downsides to putting off retirement when you're already financially prepared. Every additional year spent working is a year you could have spent traveling, seeing family, or enjoying retirement while you're healthy enough to do so. And remaining in a stressful job isn't necessarily harmless.

The National Institute for Occupational Safety and Health links workplace stressors with cardiovascular disease, depression, high blood pressure, and sleep problems. Working another year might increase your savings without meaningfully changing your long-term financial security.

Someone with sufficient assets and reliable income could find that an additional $15,000 or $20,000 makes little difference to their retirement outlook. The year spent earning it, however, is gone.

The goal isn't to retire with the largest possible balance. It's to have enough money to support the retirement you actually want.

Bottom line

Another year of work is worth it when it fixes a specific problem, like a coverage gap before Medicare, high-interest credit card debt, or a budget that doesn't cover your bills. If your numbers already work, staying longer may cost you more in time and health than it saves.

Don't assume you'll get to choose when you retire, though. In EBRI's 2026 Retirement Confidence Survey, nearly half of retirees reported retiring earlier than planned, and the median retirement age was 62. Pay down your most expensive debt or close your biggest savings gap now, while you still have a paycheck. That way, you can keep more money to help you stick to your retirement plan.

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