Working longer allows you to ramp up savings in your 401(k) and hold off on claiming Social Security benefits. Extending your career isn’t always in the cards, however.  Older workers who develop health conditions may exit the workplace earlier than anticipated. Newly disabled workers in their 50s and early 60s experience an average 50% decline in earnings two years after the onset of their condition, a new study found.

Develop health conditions

When it comes to shoring up your retirement savings, “work longer” isn’t always the right answer. There’s no denying that staying at work has its perks. For instance, employees who are 50 and older can defer the maximum $19,000 into a 401(k), plus the catch-up contribution of $6,000 this year.

In addition, pre-retirees can boost their retirement income by opting to remain in the workforce a little longer. For each year you delay Social Security, up until age 70, you get an 8% increase in your benefit check. But not everyone can continue to punch in and those who curtail their careers due to health conditions take a hit to their retirement security.

Workforce a little longer

Indeed, 3 out of 4 Americans aged 65 and over have multiple chronic conditions, which can include diabetes, high blood pressure and arthritis; according to the Centers for Disease Control and Prevention. These ailments threaten older people’s finances when they are forced to cut their hours or stop working altogether.

A recent study from Mathematica’s Center for Studying Disability Policy found that newly disabled workers in their 50s and early 60s see their earnings decline by an average of 50% two years after they develop their condition. “People don’t think about disability being a possibility; they think about short-term medical bills;” said Josh Nelson, a certified financial planner and founder of Keystone Financial Services in Love land, Colorado.

Newly disabled workers

The Mathematica study examined 3,105 individuals who were born between 1931 and 1947; following them over the course of about 20 years. About 14% of the participants experienced a work-limiting health condition by age 59. Another 12% of the people surveyed reported such a condition by age 63, and another 10% said they experienced this by age 67.
The study found that individuals who experienced these health problems were more likely to exit the workplace early. For instance; at age 59, participants with conditions that affected their work were about 2.5 times more likely to stop working; compared to healthier peers. Though federal disability and retirement benefits help affected workers to make up for some of their lost earnings; it doesn’t fully replace what those workers were making, the study found.