Blog 17: RETIREMENT CONTINUED
I thought the article posted below would be of interest to my readers, since it is a continuation of my work on the MYTH OF RETEREMENT, in the first place.
The information below comes from HEALTH PARTNERS MAY SELF-EXPLANATORY RELEASE on RETIREMENT.
Here are three reasons we might do well to retire as early as we can, even if that means retiring at 68 instead of 70 or 75.
Reason No. 1: The future is uncertain
None of us knows just how long we will live. Many people tend to assume that they have lots of years ahead of them, but some of those folks will be wrong. We may occasionally run across life expectancies in our reading and in our minds imagine living to our expected age or beyond -- but those are just averages. The reality is that while we may indeed live that long or longer, many of us will live shorter-than-average lives.
Retiring early will give you a greater chance of being able to enjoy as many work-free years as possible. You'll also be more able to enjoy being active in retirement. If you want to play some rounds of golf in Scotland or go snorkeling in Hawaii, it will be easier to do that when you're 65 than when you're 75. The longer you work, the more you're rolling the dice on how good a retirement you'll have.
If you are working in retirement, or even thinking about it, then join the crowd. According to a survey from Merrill Lynch, almost half of retirees have worked, or plan to work, sometime during retirement. And almost three quarters of workers over 50 say they will likely work in some form after they retire.
Some retirees go back to work because they need the money. But today, most people can look forward to longer lifespans, and they may not want to spend all that time in retirement. So many people keep working, or they retire and move on to another job. Other people don't view retirement as an extended vacation, like their parents may have. They want to stay engaged in a purposeful activity that contributes to society.
To be sure, working in retirement is often associated with people who have interesting jobs in the arts, education or business. They often possess special skills that allow them to stay on the job or retire to a part-time consulting position.
But professionals are not the only ones working in retirement. Many people quit the rat race, then take a lower-paying but less stressful job – sans the office politics. You may have to swallow a little pride because you no longer get invited to power lunches, but you can work at your own pace and enjoy the flexibility of a scaled-down schedule.
Here are four issues to keep in mind as you consider working in retirement.
Retirees are not necessarily slowing down. Age 65 is the traditional retirement age. But life expectancy has increased over time. Americans can now expect to live well into their 70s, and many of us will keep on ticking through our 80s and into our 90s. Our extended lifespans often come with additional years of good health. In addition, despite lingering age discrimination, studies show that our mental capabilities do not decline significantly until we become quite elderly. What we lose in quick thinking we make up for with more experience and better judgment.
You're no longer expected to retire. A century ago, retirement was almost unheard of. But Social Security, pensions and the post-war economic boom allowed more people to retire. At the same time, medical advances ushered in a longer life span, and many people can look forward to 20 or 30 years of retirement. For many retirees, this is too much time with nothing to do. They want to continue to contribute and be useful. Then there's the issue of financing retirement. It's one thing to spend a few of your twilight years without a paycheck, but quite another to finance two or three decades with no salary. And for better or worse, the government has recognized this new reality, raising the full retirement age for Social Security from 65 to 66 and soon to 67. If you retire at 65, you may be lonely because your friends are still at work.
Retirees work because they want to, not because they have to. Few people will turn down extra income, but many retirees work more for experience than money. Not everyone can afford to work for nothing, but many retirees say they work more for social interaction, mental stimulation and a feeling of self-worth. They volunteer their services to a cause they believe in, or work for an organization that may not pay as well, but offers them more self-fulfillment.
You have a dream. Some people just keep on doing what they've been doing all their lives. But others have a long-held dream they can now pursue. A marketing executive goes to work in his hometown as a real estate agent, or a college athlete retires from business to coach a school sports team. Many others take time off to rediscover what truly holds their interest. They may supplement their income by reviving a forgotten talent, or they learn a new skill, meet new people and try something they never would have considered when starting their career. When you work in retirement, you don't have to feel pressured to work for the highest bidder. You can truly work for yourself.
Reason No. 2: You can make good use of your retirement years
Another reason to consider retiring early is that your retirement years can be much more active and fulfilling than you might be assuming. Retirement doesn't have to just mean reading all of the newspaper each morning instead of skimming headlines and going out to the movies more often.
A top goal for many people is getting healthier. You can work on improving your health much more effectively if you retire early. For starters, the stress of work will be gone. You'll no longer have to wake up early to go to work, so your body may get the longer sleep sessions that it needs. You'll have time to prepare nutritious meals and to go for long walks or regular visits to the gym. If you can lose any excess weight you're carrying, you'll likely benefit in many ways, such as being at less risk of developing diabetes or high blood pressure. The healthier you are, the longer you'll likely live, too -- making your retirement even longer!
You can also still work and make money in retirement. You can leave 40- or 60-hour work weeks behind and just work part-time -- at a job that's more enjoyable and less stressful, generating extra income that can help your nest egg last longer. Alternatively, if you like your current job, you might be able to stay there, working fewer hours. It's actually good for many people to work some in retirement. Jobs offer structure and socializing, which many people find they miss in retirement.
If you're financially secure, you can volunteer as many hours as you'd like for causes or organizations you believe in. Or if you have an entrepreneurial bent, you might try starting a new business. It can be something ambitious or something smaller scale, such as tutoring or doing freelance editing. If you work just 10 hours per week -- perhaps two five-hour shifts -- and earn $12 per hour, you're looking at about $500 per month in additional income, which might cover some big budget items, such as food and/or utilities.
Reason No. 3: Retiring early might actually be financially possible
Finally, another reason you might retire early (or earlier than planned) is simply because you can. You might not have enough socked away to retire right now, but if you get more aggressive about saving and you invest your money effectively, you can probably make your retirement happen sooner. Take some time to devise a plan, estimating how much income you'll need in retirement and how you'll get it.
You can amass a large sum of money if you start early, thanks to the magic of compound growth. Investing $8,000 each year for 30 years will grow to nearly $980,000 at 8% annually. Even if you're already 50, you have a dozen years left until you're 62. Socking away $12,000 that grows at 8% per year for 12 years will get you $246,000.
Social Security will be an important contributor to your retirement income. You probably know that you can start collecting benefits as early as age 62 and as late as age 70, and that by delaying, you can make your checks bigger. Well, that's true. For every year beyond your full retirement age that you delay, your benefits will grow by about 8%. Delay from age 67 to 70, and your benefits will be about 24% bigger. That can sure seem like a reason to work as long as you can. But hold on -- remember that while the delayed checks will be bigger, you'll receive fewer of them. The Social Security program is designed to be a wash for those who live average life spans. If you start collecting at 62, the earliest age that you can, instead of waiting until 70, you'll get 96 more checks!
Retiring earlier may be more possible than you thought -- and more enjoyable, too. Take some time to think through your situation and see how early you can start working less and enjoying your life more.
The $16,122 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,122 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after.