Suze Orman: Don't retire, or claim Social Security, until you turn 70

Suze Orman attends NRDC's 'Night Of Comedy' benefiting the Natural Resources Defense Council. 
Daniel Zuchnik | WireImage | Getty Images

Young people are aiming to retire in their early 60's, but that might not be the best idea, says Suze Orman, financial expert and former CNBC host. "The goal is to make sure that your money lasts as long as possible," she tells CNBC Make It.

Orman recommends working later and waiting to both retire and begin claiming Social Security until you turn 70. That may seem daunting, but it's also practical. "Every year you wait between your normal retirement age and 70, Social Security will add a guaranteed 8 percent to your eventual monthly payout," Orman writes in a recent feature for AARP The Magazine

"Delaying Social Security can be the most precious tool in your retirement planning kit," she adds. "Delaying your Social Security start date until age 70 entitles you to a monthly payout that's more than 75 percent higher than your age 62 benefit."

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Also, you may well need your retirement funds to stretch farther than you expect. A person who makes it to 65 "could expect to live an average of 19.4 more years," according to the CDC. Living well into your 90's or beyond isn't out of the question, especially if you're well-off.

Given that you may need to support yourself for decades, spending an extra five to 10 years in the workforce, even just part-time, makes sense.

Continuing to work helps increase your retirement savings substantially, Orman says: "Your retirement accounts will last you longer and hopefully have grown over that period of time, which hopefully will generate more income for you."

And it gives you more time to pay off any remaining debts, such as your mortgage, which will lower the overall amount you need in retirement.

Every year you wait between your normal retirement age and 70, Social Security will add a guaranteed 8 percent to your eventual monthly payout.
Suze Orman
financial expert and former CNBC host

Research backs up Orman's suggestions. A study from the Stanford Center on Longevity suggests that the typical American would benefit from a later retirement age. After analyzing 292 different retirement income strategies, the research team identified the best way for most people to withdraw their money in retirement, which they call the "spend safely in retirement" strategy. A key component is delaying Social Security payments until age 70, as Orman suggests.

"The best way for an older worker to implement the Spend Safely in Retirement Strategy is to work just enough to pay for living expenses until age 70 in order to enable delaying Social Security benefits," the report says. "In essence, 'Age 70 is the new 65.' To make this method work, retirees may also need to significantly reduce their living expenses."

However, working until age 70 isn't an option for everyone. In this case, Orman says it's okay to start withdrawing from your retirement fund when you need to, but stay aware of how much you're spending. "It's not the first 10 or 15 years of retirement that concern me — it's how you'll fare if your retirement stretches another 10 or 15 years beyond that," she writes in AARP The Magazine.

Check out more of Orman's retirement advice in the video below:

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