QI am 59 and wish to retire in three years. To have enough retirement income, I could take Social Security early at 62, or withdraw $2,000 a month from my retirement accounts. Which is the better option?


A One of the smartest financial moves many people can make is delaying filing for Social Security benefits. Your benefit goes up by 8 percent each year past your full retirement age until age 70. (There is no additional gain past age 70.) That's a tough benchmark for any professional money manager and diversified retirement portfolio to beat. Put somewhat differently, for the average person working an additional eight years -- shifting the retirement age from 62 to 70 -- increases their retirement income by two-thirds or more, according to calculations by Robert Lerman of American University and C. Eugene Steuerle at the Urban Institute.

Of course, many older workers are eager to say goodbye to their employer for the last time by age 62. Enough is enough. It's time to mix things up a bit. I expect a large exodus of aging boomers from their employers when it's clear to everyone that the economy has finally regained its vigor. However, it still pays these 62-plus future retirees of America to earn an income through a part-time job, flex-time work, project contracts or a less demanding full-time position. That way your retirement savings continue to compound. Depending on your income and expenses you may tap into them along the way to make up for any shortfalls.

There's another factor to consider when thinking about this strategy: unexpected expenses. The odds of a financial surprise in retirement are huge. In a correspondence with Henry "Bud" Hebeler, the founder and driving force behind Analyzenow.com, he emphasized the importance of planning for the unexpected.

"Every single one of our friends has had some serious financial surprise during retirement that was completely unseen," says Hebeler. "By far, the most common unforeseen thing has been adult daughters getting divorced and trying to support several children. Others, including ourselves, had to provide major financial help to our parents."

A classic example of an underestimated expense is health care. The mutual fund giant Fidelity calculates that a 65-year-old couple retiring in 2012 will need some $240,000 to cover medical expenses through their retirement. When Fidelity first made the health care estimate in 2002 the figure was $160,000. Here's the thing: The $240,000 out-of-pocket estimate is for people with Medicare coverage.

Simply put, working longer shores up your financial safety net and makes it easier to pay unanticipated or underestimated bills. For your next stage of life, you need to think about what provides income and meaning. These are the most critical parts of a sound retirement plan. Then you can make a reasoned decision about Social Security and retirement savings.

I would spend time at a good online retirement planning site like Analyzenow.com. An even more detailed program is offered at ESPlanner.com. You'll need to run the numbers and think through your particular circumstances. See what you think after running through various scenarios. Good luck.

Chris Farrell is economics editor for "Marketplace Money." His e-mail is cfarrell@mpr.org.