Why You Shouldn’t Retire

Yesterday, I wrote You May Never Be Able to Retire. Frankly, it was a little depressing, although it hinted at hope for a brighter retirement than many of us envision when we look at the money we have saved. There are some very good reasons why you shouldn’t retire.

Why you shouldn’t retire

The first thing we ought to do is put retirement into an historical context, because for most of history, no one retired.

Retirement first became a household idea in 1889 when German Chancellor Otto von Bismarck introduced the world’s first social security system.

Retirement as a norm in the U.S. began in 1935 with the introduction of Social Security. As part of the legislation, 65 was established as the retirement age. At that time, men could expect to live to 60, so the government figured few people would live long enough to even qualify for benefits. But those reaching 65 at that time could could expect to live another 12 years on average. Still, it was clearly never intended to fund a  retirement of two decades or longer. Hence, the introduction of the 401(k).

This, very quickly, brings us to the present and the 401(k) plans that have been praised — by some so-called professionals — as the salvation of our retirement; if we could just manage to put a little more of our hard-earned money into them.

Every day, we’re sold a bill of goods by the wealth management industry.We’re told that if we’re good little savers for the next 40 years, we won’t end up living in a box somewhere. Assets under management in the U.S. in 2009 totaled $31.4 trillion. Based on a 1% annual fee (it’s likely much higher), wealth managers generate $314 billion in revenue each year from those assets.

It appears that much of our savings is going towards providing fund managers with their own cushy retirement. Is that really the best use of our money?

Why shouldn’t you retire?

Laura Vanderkam is the author of several books about money and has written for many national publications including USA Today, CBS MoneyWatch and The Wall Street Journal. She asks:

“Rather than calculating how many lattes we must forgo to live off interest at age 65, why not put that same mental energy into figuring out what kind of work we wouldn’t want to retire from?”

This is important. You may not like the work you’re doing now, but what kind of work would you like to do that would keep you active, challenged and involved for as long as you choose to do it?

A second point, and equally important, is that every $10,000 you’re able to earn working in your senior years amounts to $250,000 you don’t need in savings. Someone who’s worked a physically demanding job their entire career might have to use their brainpower instead of brawn to earn the extra income. Uncomfortable as it might seem, this type of personal growth will keep you healthier longer, reducing your medical costs as you get older.

By simply deciding to keep working into your 80s, you help yourself in four ways: less savings required, personal development, mental stimulation and lower healthcare costs. It’s not what the retirement industry wants you to hear, but it’s so true. Do as much as you can for as long as you can.

Start now to think about what you’d like to do and how you can make money at it for as long as you want. You’ll be glad you did and will better understand why you shouldn’t retire.

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