​4 reasons to keep working as long as possible

More Americans keep working beyond what has traditionally been retirement age, for many good reasons. Just a few are to stay socially connected, doing what you enjoy, having a sense of purpose and simply keeping up a routine.

Also, with the persistence of near zero-percent interest rates on savings and increasing costs of living, older workers are rightfully concerned about not having enough savings to last their lifetimes. When constructing your retirement plan, here are the four main financial benefits to consider when it comes to continuing to work and earn as long as possible.

Delay drawing down your savings: If you can keep earning enough money so that when combined with other sources of retirement income, such as Social Security, you're able to pay your living expenses without drawing from your savings, it can really help make your money last.

Here's an example to consider. Assume a person age 65 with $300,000 of savings begins to draw down $20,000 per year from that savings immediately. He could deplete his savings by age 85, or sooner. But if instead, this person had additional income from working and could delay spending down his savings for five years, to age 70, his savings could last to age 95. Because the drawdown started five years later, the full $300,000 was also able to grow for an additional five years.

Add to retirement accounts: Another big advantage of earning an income for more years is that you may be able to keep building up your retirement savings by making regular contributions. For 2015, people age 50 or older with earned income can contribute $6,500 per year to an IRA or Roth IRA. One caveat: Once you hit 70½, you can no longer contribute to an IRA, but you can to a Roth IRA.

If your employer offers a 401(k)-style retirement savings plan, and you are age 50 or older, you can contribute as much as $24,000 in 2015. And if you're self-employed, you can contribute as much as $59,000 to your own self-employed retirement plan.

Increase Social Security benefits: Another big plus of working longer is that you can really boost the monthly amount you get from Social Security. If you begin taking benefits at age 62, the amount you'll receive will be permanently reduced by about 30 percent. But if you wait until what's called your Full Retirement Age, or FRA, (that's age 66 for those born 1943 to 1960, and 67 for those born after 1960), then no reduction will apply.

But if you can delay taking these benefits after your FRA, your monthly check will be boosted by about 8 percent per year for every year that you postpone taking benefits after your FRA. One catch is that after age 70, this "delayed retirement credit" no longer applies, so it doesn't make sense to delay Social Security benefits after age 70.

Continue health insurance coverage: Because most employers don't offer continued health insurance coverage for retirees, most people have to pay for their own insurance when they leave the workforce. But if you keep working for an employer and qualify for coverage under its health insurance plan, that can help defray this additional cost. If not, you'll likely turn to Medicare after age 65.

  • Ray Martin

    View all articles by Ray Martin on CBS MoneyWatch»
    Ray Martin has been a practicing financial advisor since 1986, providing financial guidance and advice to individuals. He has appeared regularly as a contributor on the CBS Early Show, CBS NewsPath, as a columnist on CBS Moneywatch.com and on NBC-TV's morning newscast TODAY. He has also appeared on the Oprah Winfrey Show and is the author of two books.