If you’re one of the people who has decided to solve the retirement problem by “working for as long as possible”, it’s time to ask yourself what might happen if your working days end sooner than anticipated.
Many Americans understand that working longer can be a good way to improve retirement security. According to the Employee Benefit Research Institute, 33 per cent of workers expect to retire between the ages of 65 and 69, and 34 per cent at 70 or beyond, or not at all.
Yet a recent study by the Center for Retirement Research at Boston College found that 37 per cent of workers retired earlier than planned — and that the odds of success fell as the goal became more ambitious. In that study, among the 21 per cent of workers who said they intended to work to age 66 or later, 55 per cent failed to reach that target.
In other words: Whether or not you’re able to work past the traditional retirement age essentially comes down to a coin flip.
Yes, there are a lot of advantages to being able to earn income in your late 60s and early 70s. For example, the more money you earn in your later years, the more money you can put towards day-to-day expenses as well as travel, healthcare, and whatever else you might need or want in your retirement.
However, there are a lot of factors that might prevent you from hitting your target retirement date. The New York Times reports that health issues and job loss are the two biggest reasons why people retire earlier than planned — and while you can work to maintain both your health and your career in your senior years, you can’t prevent an unexpected diagnosis or downsizing.
What does that mean for you? No matter how old you are, and no matter how long you think (or hope) you’ll be able to work, you need to plan for retirement.
That might mean putting more money into your retirement accounts. It might also mean asking yourself what you’ll do if you (and/or your partner) don’t have enough money to cover your basic needs after you stop working. Will you downsize? Move in with a child or relative? Share a home with friends, Golden Girls-style?
It’ll also mean periodically re-evaluating your plans, whether you’re a 30-something who needs to adjust your super contributions after the birth of a child or a 60-something who needs to adjust your target retirement date after an unexpected layoff.
Because all of us will stop working someday, even if we’d like to think we’ll work for as long as possible.
So start planning for that date now.