Final answer:
Delaying retirement increases income through additional years of earnings, longer investment growth periods, and possibly higher Social Security benefits. Diverse retirement savings options, such as stocks and bonds, contribute to a larger financial reserve. Relying solely on Social Security for retirement income is not recommended due to its limitations.
Step-by-step explanation:
When considering delaying your retirement by a few years (option b), it's essential to recognize how this choice can impact financial security during one's golden years. Working longer means additional years of earning an income, contributing to retirement funds like 401(k)s, and deferring the need to draw down on savings or Social Security benefits. The act of postponing retirement allows for a longer period for investments to potentially grow, thereby increasing your income during retirement. Not to mention, working extra years can result in a higher Social Security benefit, as the benefit amount is based on your highest 35 years of earnings.
Retirement savings can be composed of varying elements such as stocks, bonds, and annuities, each with different levels of risk and potential return. Moreover, an increase in present income can lead to higher savings rates, contributing to a more substantial financial foundation for retirement. It's worth noting that while Social Security provides a safety net, it is widely advised that it should not be the sole source of retirement income due to its limited replacement rate of one's pre-retirement income.