Study: Delaying retirement might help you live longer

Delaying retirement has many financial benefits. You can tuck away some of your continued earnings for the future and give your existing savings more time to compound. Social Security payments also increase for those who sign up at an older age. A new study from Oregon State University found that retiring after age 65 may additionally help you live longer.

[Read: How Working an Extra Year Improves Your Retirement Finances.]

The study, which was published in the Journal of Epidemiology and Community Health, found that healthy adults who delayed retirement for one year past age 65 had an 11 percent lower risk of dying. "Late retirement has a beneficial effect on longevity and early retirement is associated with higher mortality," according to the report.

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The study included data from 2,956 Health and Retirement Study participants who were working in 1992 and entered full-time retirement by 2010. The healthy retirees in the study said their health had no impact on their decision about when to retire. The longevity bonus for delayed retirement held even after the research controlled for income, education, lifestyle and health issues. "There was no evidence that the effects of retirement age on mortality were modified by sociodemographic characteristics, suggesting that the beneficial effect of retiring late may be universal across different sociodemographic profiles," the study found.

The health benefits of delaying retirement were also observed for people with health problems. Individuals who reported that poor health played a role in their decision to retire had a 9 percent lower risk of death when they worked an extra year.

Retirement is a major transition that changes the daily activities you perform and the people you interact with. "Retirement could be a stressful life event associated with cognitive decline, difficulties in daily activities, morbidities, anxiety and depression," according to the Oregon State report. Retirees often leave behind workplace social connections, and it takes a considerable amount of effort to create and maintain a new social network.

[See: 10 Ways to Make Extra Money in Retirement.]

The study suggests that postponing retirement may delay age-related declines in physical and cognitive health. "We know people's functional status, physical and cognitive, inevitably declines at some point when aging," says Chenkai Wu, the lead author of the study. "Delayed retirement, which could potentially mean keeping cognitively and physically active and socially engaged, may, at least partially, help delay the onset of that decline."

Another possible explanation is employment is an important part of your identity that provides financial and social benefits that could be lost when you exit the workforce. "Working longer might be culturally acceptable and even encouraged given work per se is highly valued in the U.S.," Wu says.

However, you may not need to work full-time for pay to gain some of the benefits of continued employment. There's a possibility that volunteer work, an active social life and taking on new challenging activities could work as well. "One possible explanation is that work involves mental, physical and social engagement, and maintaining such engagement into the later years may have health and longevity promoting effects," says Robert Stawski, an associate professor at Oregon State University and co-author of the report. "As such, working, per se, may not be a prescription for longer life, but serves as an indicator for the value of an engaged lifestyle."

The average retirement age in the study was just shy of 65, but retirement ages ranged from 53 to 79. Just over a third (35 percent) of the retirees said poor health played a role in when they decided to retire. About 12 percent of the healthy retirees and 26 percent of retirees reporting poor health died over the course of the study. But both groups of retirees benefitted from extra time in the workforce. "Early retirement may be a risk factor for mortality," the study found. "And prolonged working life may provide survival benefits among U.S. adults."

It probably doesn't hurt that delaying retirement gives your finances a boost. If you postpone claiming Social Security for one year from age 66 to 67, your monthly payments will increase by 8 percent. For example, a retiree eligible for $1,500 monthly at age 66 could boost his Social Security benefit to $1,620 per month if he instead claims at age 67. These higher payments will continue for the rest of your life.

[See: 10 Jobs Hiring Older Workers.]

Your nest egg could also benefit from an additional year of work. If you have $100,000 in a retirement account and it earns a 5 percent return, your nest egg will grow by $5,000. If you save a significant portion of your continued earnings, and pick up a tax break and employer contribution by contributing to a 401(k), you will grow your nest egg even faster.

Emily Brandon is the author of "Pensionless: The 10-Step Solution for a Stress-Free Retirement."

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