If you apply for Social Security at age 70 instead of age 62, the total amount of your accrued benefits will be 17% higher if you reach age 82 (which matches the male life expectancy at age 62). And remember, this is low-risk, inflation-indexed income; there is no better deal on the market.

Sure, delaying benefits means fewer years to collect them, but if you end up living to your early 80s, you’ll come out on top. The figure below shows how much you will receive from Social Security (adjusted for inflation and discounted using today’s TIPS curve) at each age based on when you take your retirement.

And if you’ve already claimed Social Security, you can always change your mind and get higher benefits.

But if you’re already retired (or resolved this year) and the market is down, it might seem like delaying Social Security isn’t an option. After all, you still need to eat.

Human capital

This is where your third source of income comes in: human capital. This is what economists call your earning potential from your work. When it comes to retirement, we normally assume that human capital is worth zero — after all, you’re retired! It’s supposed to mean you’re done with the job.

But as people live better and longer, we need to rethink our definition of retirement. Retirees can develop a more fluid relationship with the labor market. Retirement in the future may mean periods of work and periods of leave.

It might seem daunting if you were planning on leaving your work days behind. The good news is that it doesn’t have to be the same old grind. This may mean working part-time, accepting an occasional consulting assignment from your former employer, or doing different types of work on demand.

It’s not just better for you financially. Staying active in the workforce can be healthier for your mind and body by keeping you engaged and socialized.

And it is very appreciable from a financial point of view because working allows you to protect yourself against market declines or to delay the subscription to Social Security. And if you choose to work as an independent contractor, you’ll have more control over what work you do and when you do it.

This creates the opportunity to do more of the kind of work you love, and less of the aggravating parts.

So if the markets are making you think you need to cancel your retirement or delay your retirement, consider semi-retirement or self-employment instead. Talk to your employer about working as a contractor or explore applications that match workers to projects at all skill levels.

Now that the pandemic has moved jobs online, flexible and remote working has never been easier. The high demand for workers also makes companies more flexible. If you’re old enough to claim Medicare, you don’t even need health benefits anymore, which makes it easier for you to be picky and makes you more attractive to employers.

The world can change, feel riskier and more uncertain. But these changes can also work in your favor. Just adapt to the times with a more elastic definition of retirement.

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