I am all for retiring early and often where in our retirement we can have any number of paying pursuits of interest and passion. But there is a huge difference between “being open to” and “expecting to” work until 70. Expecting to work to age 70 is the riskiest retirement plan. I hear and read a lot lately about how 70 is the new 65. How the issue of longevity requires delaying retirement, and how you will get a big jump in Social Security benefits. If you have little saved for retirement, getting the higher Social Security amount at age 70 looks like a solution to consider. It really looks good on paper if this was a perfect world, but it isn’t.
It’s totally fine to not desire an early retirement and want to work longer to cover financial shortfalls. But a retirement plan of working to age 70 has a very high chance of retirement failure in more ways than one. No offence to all the retirement experts touting this age 70 advice. What else can you say to people who haven’t saved for their retirement nor feel they can start saving now? However, if you are someone worrying about your lack of retirement savings and are wanting to do something about it, motivating yourself into starting a lifestyle and savings plan to retire earlier instead of expecting to retire later is the better retirement plan and here’s why.
Expecting To Work To Age 70 Is The Riskiest Retirement Plan
The reason expecting to work into older age is a risky plan comes down to two issues that will most likely bite you on your keister.
1- The ugly truth is we don’t always get to decide when we retire.
The Center for Retirement Research at Boston College study found of people age 55 who had a planned retirement date in mind, nearly 50% had retired earlier than they wanted to. Other studies show the overall percentage even higher. These weren’t only people planning to retire at the late age of 70. Many would have earlier planned dates of which they couldn’t reach. It makes sense that the farther out your date is the higher the chance you won’t make it. The percentage of planned age 70 retirement misses are more likely much higher. We may be able to do things to control our personal finances, but the unfortunate reality is we have no control over other factors. Factors that can force us into retirement before we planned for or wanted.
2- The other issue that makes this the riskiest retirement plan – Setting a lower retirement savings bar for ourselves by pushing the date out so long.
It usually always results with putting in a lower effort to find ways to save more for this huge life event. It’s the way we are wired, more aggressive goals leads to higher efforts to meet them. If someone is worried about their dismal retirement savings amount, then the “expecting to work to 70” plan is sugar-coating the issue. Feeling better about retirement finances by pushing your date to age 70 isn’t a guaranteed or realistic fix. For a high percentage of people it is only a false hope plan.
Reasons Why People Retire Earlier Than Planned
It shouldn’t be surprising that the biggest reasons people retire before they planned is related to health and job loss. Sometimes we can do everything right toward trying to control these issues but it can still go wrong.
Reason One – Health
We all can try to live a healthy lifestyle. Some of us are better at it than others. But even the healthiest of us can fall to injury and illness. Many physically fit people get cancer and heart disease. Aging athletes, extreme weekend warriors, and those in physically demanding jobs end up with bad knees, backs, hips, and other health issues that can end their career as time goes on. Even thinking you can count on a sweet little retail gig to get by is a risky bet for many. Standing on your feet all day gets a lot more painful and harder to do as we age.
It isn’t limited to our own health either. Many people retire before they expected because of a loved one’s health issues. Becoming a caregiver happens more often than you think.
Reason Two – Job Loss
No matter how much we love our jobs and plan to stay doing it, things can change. We can do everything to stay a hot-shot and still lose our jobs. Just look at how real estate brought down the world markets in 2007 and started a job killing recession. There’s the influence of politics like recent trade war threats, shifting market trends, company mergers and automation causing layoffs, and company employment shifts to insourcing and outsourcing when they see they can save a nickel. Then there’s when companies go out of their way to target older employees for termination at an age when it’s harder for them to find an equally paying job. Guess what? That even goes on in today’s low unemployment rate job market! How’s that retire at age 70 retirement plan going to work out if that happens?
Why Setting Earlier Retirement Goals Beats Expecting To Work Until 70
The older age that you set your retirement date the more likely you will be disappointed because your retirement savings goals and priorities will be lower. You will be financially short if forced into an earlier retirement. That can still happen with any set retirement date, but by shortening the time-frame it reduces the risk. Those who are making an effort to cut lifestyle cost and saving for an earlier retirement have many more options.
Life is finite and we trade our time for money. Working until 70 trades away our healthiest time of life. It stands to reason that most people are more active before age 70 than after. Although on paper delaying retirement to age 70 looks like a financial winner when savings are short, you can say the same about working to age 80, or death. We have to figure out if we are working towards saving for an active and well deserved retirement or just to make sure there’s something left in our estate.
Social Security doesn’t have to be started when we retire. We can still delay it to age 70 if we can cover our retirement with other means like savings, part-time work, a side hustle, or a combination of all. That is if it makes financial sense to delay Social Security. Our Social Security is an important part of our retirement strategy and planning. Research and professional assistance is crucial in making this decision. There are a lot of considerations to evaluate.
Improving Your Retirement Odds – What to do
If you consider yourself part of the 38% of Americans in the recent Northwestern Mutual study findings who anticipate working until 70, ask yourself:
What would I do if I lost my job today? At any age before 70? Take your pick of critical ages.
Then think about what you wish you would have done to make this situation better and start doing it now.
We need to prioritize retirement preparedness beyond expecting to work until age 70.
Set earlier retirement goals with higher savings efforts to meet it. If we’re able to continue working, we can always extend our earlier retirement date If we miss our savings goals or just want to stay in the workforce. Higher savings also means we can afford to take on part-time work to make ends meet while trying to manage any physical or health limitations instead of being financially forced into full-time work until age 70.
Take care of your health.
Drop unhealthy habits, eat better, exercise, and stay active. But take it easy with the daredevil stuff. Start doing some health related risk assessments in the activities you do and your lifestyle.
Transition out of physically demanding work.
If you are in a physically demanding profession and will be working into your late 50s and 60s, then start figuring out how to transition out of it as you get older. It’s better to make a move before you have to make move or are forced to make one. Not only to prolong your employment but to reduce your risk of a lifelong injury.
Keep your skills relevant and continue self improvement as if your job and retirement depends on it, because IT DOES!
Don’t get complacent in your seniority and experience. Think about what you can be doing to always be employable. Never trust or believe that where you work or what you do will always take care of you.
Get motivated.
Cut any lifestyle cost waste and escalate your debt repayment and savings rate. If you aren’t motivated by having an earlier retirement date, use fear of a possible forced retirement before you’re ready. A forced retirement that comes with a heavy dose of financial desperation. That thought should get you motivated. Any savings improvement is better than no improvement. Build an appropriately balanced portfolio of cash and investments that will payoff over the long-run. Research and seek professional advice.
Ready or not, everyone alive will one day retire. Being short of retirement savings and deciding to just go with an expecting to work until 70 plan is the riskiest retirement plan of all. It really isn’t a realistic plan. It’s more of a false hope, feel-good plan. There is a high chance you won’t be allowed to, able to, or want to work until age 70. If anything, it should be a last resort default, one’s Plan B, C, or lower plan that may never even be available when you need it.
A more realistic Plan A retirement plan is to set your sights higher and push as hard as you can for an earlier retirement. That kind of plan does have guarantees that comes with it. No matter what happens, you are guaranteed to be in better financial shape at retirement than if you hadn’t done it. It will offer more options than a failed work until 70 expectation. And, if you end up able and willing to still work until 70, then you not only beat the odds but you will have much more available to go along with your higher delayed Social Security payments.
I agree, planning to work until 70 or even 65 these days probably isnt a good plan. I think trying to set yourself up to be in a good position by 50 would be a smarter goal. Things can change quickly and its better to be prepared than to try to adjust after the fact especially when you are older. You cant expect the gravy train to always be there. Plan and invest some when you are young and dont blow all your paycheck on big ticket items thinking you’ll always be getting that next big paycheck. Get your finances together early to give yourself more and better options before its too late.
Thanks for the comment Arrgo. I totally agree with you. A few things came to mind when I was reading a “work to 70 retirement” article in the Sunday paper: An IBM article about targeting older employees, a recent layoff announcement at Century Link (of which I included links to in the post), and wondering how many of those impacted older employees thought they were safely employed until they were ready to retire. This still goes on even with low unemployment and massive corporate tax cuts; and it certainly will deliver to older displaced workers the same age bias of the past when looking for a replacement job. When we are younger and healthier we think we keep doing whatever we do until we are ready but that is risky thinking. Getting your sh!+ together and planning/saving for an earlier retirement is the far better plan.
Tommy
I say the same thing, Argo, ALL THE TIME about setting yourself up to be financially independent or at least semi-independent (i.e. you could make ends meed with a combination of investments and a low paying job) by the time you’re in your 50s.
Most people either get burned out or booted out of good paying employment in their 50s. This has been true for a long time. I have seen this with countless people I know and countless others I’ve read about. I wish people would wake up to this reality! Life is so much better when you can work because you want to instead of because you have to!
Thanks for leaving a comment Mysticaltyger. Amen to that!
Tommy
Saying that you would retire early is easier said than done. Everyone dreams of having a comfortable and fun retirement. Unfortunately, there are some people who need to work until they are 70 to make sure that they will survive retirement when they are living on fixed income. I agree that setting early retirement goals can help avoid working until you’re 70. It’s important to plan for unexpected retirement expenses such as health care and long term care costs to make sure that you have enough funds to pay for your care needs. It also pays to discuss things with your spouse to make sure that you’re on the same page financially, make conservative retirement approach, maxing out retirement contributions, avoiding to apply for Social Security early and anticipating expenses like home repair or modification, weddings, car maintenance and family occasions.
Thanks for the comment. I agree, some will have no choice but need to work until age 70, but saying that is also easier said then done for many people. I do get it, for many that is the only possible plan to come up with. But my concern is it is becoming a popular cop-out to avoid making harder choices regarding pushing ourselves for better financial/savings habits/practices and a coming huge disappointment if the work until 70 plan fails.
Tommy
If someone wants to keep working until 70, I say go for it. As you stated, however, they should not base their savings and investing on retiring at age 70. There are too many factors like health and economic issues that might cause them to have to exit the workforce much earlier. Work as long as you want, but manage your finances so you can retire early.
Thanks for the comment Dave. I certainly believe in retiring early and often which has no age limit. Working until 70 should at best be a default plan or Plan B because of the very issues you have stated.
Tommy
I had originally planned to work until 70 just because work was that much fun but I also was financially independent in my fifties. But a funny thing happened and once I realized that all I was doing was piling up excess money I didn’t need, the work became a lot less fun and then when things really got unpleasant at work I was able to walk away. I agree planning on working until 70 out of need may be the only option for some but it is risky business. Health, age discrimination and a general loss of patience with corporate nonsense all become bigger factors as you get older. Great post, although it is a little painful to point this stuff out to people with no other option.
Thanks for the comment Steveark. I know people who are relying on this work to 70 retirement plan and I see they live and spend as if it is guaranteed. I certainly get it that for many this is their only option. But I hope by being brutally honest about the pitfalls that they at least put in some effort to make positive changes for something more realistic and give themselves options for when the odds go against their plan.
Tommy
Thanks for this info, it was nicely put. I know several doctors who did not last to their desired retirement date. They had a stroke, they died, the medical board took their license, their spouse became ill and they stopped working to take care of them, and the list goes on.
Last January I did a piece as a pro/con on the age to take social security if you didn’t need it. I took the side of age 62, my friend took the side of age 70. My idea was, if you don’t need the money, just take it now and enjoy it for eight extra years. The comments were very polar. Each side so sure that was the best decision. Many forgot the premise of the question was that you don’t need the money, you are already financially secure, so the decision really doesn’t matter.
I set my sites on being financially ready to retire at age 50. After I reached that, I cut back to part time and helped out in rural areas that didn’t have enough surgeons to handle the load. I pulled the trigger and retired from medicine at age 54. When you are ready, you have options. If you are not ready, you have no option but to keep working.
Now I spend my time teaching doctors about personal finance through my blog, my award winning book series, lectures, and one-on-one coaching. It is a fun new mission that would not have been possible, if I had not saved for an early age to be financially independent. Had I set my sights on 70, I would not be doing this today.
Dr. Cory S. Fawcett
Prescription for Financial Success
Thanks for the comment Cory. I agree with your social security approach. You and I have a similar story when it comes to doing what we could to have retirement options.
Tommy
I often think these days about retirement and all that goes into it (I’m now 51). I don’t think it is a smart idea for a number of reasons:
1. We should really not be involved in ‘work’ if we don’t have the mental or physical capacity for it.
2. Waiting until 70 to retire almost certainly means that you’ll die soon after you retire (most likely from stress and overwork).
I’m hoping to hang up most of my ‘tools’ by age 55 and have all the plans in store for it! Just watch this space.
Thanks for the comment Jolisa. Sounds like you have a solid plan. I retired the first time at 51, took on an encore career I was interested in and retired again at 56. I believe we should plan to retire earlier and leave open the option to work for as long as we WANT to instead of depending on working until 70 or older. I really believe that work until 70 is a plan destined to fail more than it succeeds.
Tommy
We are traveling later this year, and for the UK, the car rental age maxes out at 70. Just something else to be aware of.
I’ve seen with my mom, aunt & uncle since our first family trip, until recently, an increase in ailments, and or caution in how much physical activity to book in 1 day.
I told one of my bosses I am not planning to work to 65, and he said he’s got maybe 5-10 years left in him. (Also not to 65.) I’ll happily live well past 70, but I’m not interested in putting up with as much of other people’s bs as I do now at work.
Thanks for the comment Jacq. I saw the same issues with my relatives. I believe that planning for and taking action for an earlier retirement is better than expecting to work until 70. That plan is simply to much of a long shot.
Tommy
Working until 70 is a very unrealistic scenario. The most elders decide to retire before 60s, and nobody likes to work until 62. If someone is working till 70, then it will be either due to financial problems or only to keep an active lifestyle. That’s why deciding about your right age to retire is a very important thing. You may need to invest in your property to secure a way for financial help with reverse mortgage at the times of need. Whatever you plan should be implemented in the right way.
Thanks for comment Nauman. I agree with you that Working until 70 is an unrealistic scenario for most people. It can work for some people but making a retirement plan that depends on working until 70 is probably going to fail. Then what? Best to plan and do everything possible to retire at a reasonable age and if all goes well they can continue working for as long as they want or can.
Tommy