For those that delay contributing to their retirement account, those retirement income amounts can be greatly reduced.  The Insured Retirement Institute has conducted some research to show the impact of delaying starting to save or a shorter investment horizon on the retirement income one can expect to generate.  As well, through their research, IRI wanted to demonstrate that if you wanted to achieve that same level of income you could have if you started earlier, what the cost of that would be.  

Activities such as seizing or suspending contributions and borrowing from a 401K should be avoided because the long-term impact is quite significant, says Frank O'Connor, Vice President of Research and Outreach at IRI .  The amount one should put aside towards their retirement account varies from person to person and really depends on what type of retirement that person is trying to achieve, as there are varying types of standards of living during retirement.  O'Connor says there are some things that one can't avoid, such as healthcare costs, that would be well-served by trying to contribute as much as possible.  "Ultimately, you can only save what you can save," he says and you have to modify other parts of your budget in order to facilitate that.  That being said, once you get to a certain point towards retirement, it becomes "extremely difficult" to contribute enough to get to the point you'd like.  Starting early, contributing as much as possible and then during retirement, looking at an optimal way to turn that invested asset into income through guaranteed income solutions, is all part of the planning process, O'Connor says.  

The research shows that delaying retirement by five years increases your retirement income by 73%.  O'Connor says that by delaying turning that asset into income, you're getting a higher payout on that asset.  While delaying retirement a few years longer isn't feasible for everyone, for those that can, it can certainly be powerful, O'Connor notes.


Frank O'Connor, Vice President of Research and Outreach at IRI.  For more on their research on delaying saving for retirement, click here.  Frank O'Connor spoke with Retirement News Today, providing online retirement news video content.  Retirement News Today is a featured network of Sequence Media Group.