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Why Working Longer Isn't Always an Option

Joe Udo

It is difficult to save for retirement when you're young and aren't making much money. Besides, no one likes to think about getting old. We want to spend money and have fun now, not 30 years from now. But if you don't start saving for retirement in your 20s and 30s, it's even more difficult to start in your 40s and 50s because compound interest won't help you out as much. As we get older, we make more money, but we also tend to spend more money due to lifestyle inflation. Unfortunately, instead of cutting back and saving for retirement, the answer most workers come up with is to work longer or just not retire at all.

There are certainly many benefits to working into your 60s and 70s. You will generate a steady income and live a more comfortable lifestyle. It's really difficult to replace the income from your job unless you've been saving diligently for decades. Another big benefit to having a relatively steady job is the health insurance. It is also easier to keep active and mentally engaged at work. A challenging job can stimulate your mind and help maintain your physical conditioning. However, the option to work longer will not be available to many of us.

According to a recent Gallup poll, American workers expect to retire at an average age of 66. This age is a good one for retirement because you'll be eligible for Medicare and Social Security benefits. However, life rarely works out the way we plan because the average age of retirement is 62 among current retirees. Many retirees leave the workforce earlier than planned due to various reasons. Here's why you shouldn't base your retirement plan on working during your 70s.

Health problems. It's fine to say you will work longer when you're 52 and relatively healthy. However, you may develop more health problems as you get older. You might not be able to work in your current career when you're 65. Even desk jobs can create chronic conditions due to the sedentary nature of the work. Repetitive stress injuries, back pain, obesity, heart disease and other stress-related conditions are common among people who sit around all day, every day. Health is the most common reason people retire earlier than intended. Some retirees also leave the workforce to care for their spouse or another family member. People close to us age too, and chances are someone will need help.

Job insecurity. The economy has been good over the last few years, but there will be another rough patch in the future. Companies will downsize, and it's much more difficult to get back into the workforce when you're a senior level employee. While you may be well paid now due to your experience, that fact could also make companies reluctant to hire you. Companies also go through reorganizations and closures. Those events tend to be bad news for senior workers.

Most of us could save more for retirement than we do. Saving requires some sacrifices and delayed gratification, which most of us are not good at. When you say you'll work longer, that's not a good excuse for failing to save. All you are doing is kicking the can down the road. If you are able to work during your 70s it will certainly help your retirement finances, but you shouldn't count on being able to do so. Not saving for retirement while you are most able to will likely have dire consequences if you lose or need to leave your job later. It's better to cut back a bit now and save more for retirement than to have difficulties paying your bills when you're unable to work.

Joe Udo is a stay at home dad who blogs at Retire by 40.

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