When delaying retirement can pay off

Many people plan to keep working later in life and may postpone saving for retirement. But experts say planning to work into old age without saving for retirement along the way shouldn't be "Plan A." 

More than half of workers expect to work beyond age 65, according to a recent survey by the Transamerica Center for Retirement Studies. One in eight say they don't plan to retire at all.

Even if you think you'll retire later -- say, age 70 rather than 65 -- it's vital to make a financial plan to guarantee your retirement income. 

"Your plan should always be the traditional plan: Start saving early, save as much as you can," financial adviser John Vento told CBSN in an interview.

If you do plan to work longer, postponing your retirement date tends to be more effective than trying to "play catch up" on saving for retirement later in life. So if you're starting to put money away at age 55 rather than 35, a better strategy may be to plan on waiting to claim benefits like Social Security. Researchers at NBER found that working an extra year at age 66 increased retirement income by 7.7 percent.

For example, if you plan to retire at age 62 and receive a $1,162 per month Social Security benefit, delaying until age 70 would come to $2,027 per month -- more than a 40 percent increase. 

Keep in mind, retiring later may not be possible if your health or job changes unexpectedly.

"What happens if you become disabled, if you become unemployed later in life? You're not going to be able to play catch up, and then what are you going to do?" Vento said.

About half of U.S. retirees in a recent Wells Fargo study said they retired earlier than planned, many due to health reasons.