Throw away the idea of retirement. You read that correctly. It may seem like blasphemy, however, the modern notion of retirement is no longer serving us as a society. Thanks to the way we think of retirement, people experience a slew of problems they wouldn’t otherwise. Thanks to the modern retirement paradigm, many people suffer through a job they can’t stand, with the promise of retirement. Then, when they reach retirement, they choose to finally live: to travel, spend time with family and friends, and so on. The problem is, not only is it harder to keep up with these things at 65 or older, it can also be expensive. And most people don’t save enough for retirement as is.
Our proposed solution is to stop living for retirement and choose to live now. Find a job you love, create additional cash flow, and free up your time to do things you want to do now. And if something stops being enjoyable, stop doing it and try something new. Hopefully, the result is that people work longer, yet in more fulfilling ways. This can radically improve people’s longevity, income, and happiness.
The Power of Lifelong Service
When Mister Rogers, of Mister Rogers’ Neighborhood, passed away, someone found a handwritten note in his wallet that said, “Life is for service.”
The words are simple, yet profound. And they reveal a greater truth about life’s purpose–to be of service to our neighbors and the world at large. Service can be broadly applied, yet we believe this refers to work as well as attitude. When you work or volunteer, you are being of service, no matter the career. And being of service makes people feel purposeful, and passionate even. People long to have connections with others and do something meaningful.
If you look up the definition of retirement, you’ll find something like, “to take out of service.” It stands to reason, then, that when you stop working, you’re taking yourself out of service. If that sounds uncomfortable, it should. While not every period of your life will be as active as the next, retirement shouldn’t mark the “end.” It’s simply another phase and can be as purposeful as any other phase of your life.
Retirement Takes a Toll
Another aspect of retirement that we don’t talk about enough is the physical and mental toll that it takes. When you work and are active, you’re continually working your cognitive and literal muscles. This keeps everything in good shape. However, the adage “use it or lose it” is very true.
Studies have shown again and again that when people stop doing certain routine activities, they begin to lose those functions. This cognitive and physical decline can impact your quality of retirement. While not everyone slows down to such an extent in retirement, many retirees stop doing activities to the point of boredom or fatigue.
The Financial Strain of Retirement
Yet another reason retirement isn’t the “win” many people think it is, is because it’s outrageously expensive. For starters, when many people retire, they have a fixed income. This means they’re living on a combination of their savings and Social Security, and maybe a pension or residual income if lucky. Since retirement is an unknown time frame, the average person has to be incredibly frugal. That money may need to last ten years, or it may need to last 30.
Yet the way most people conceptualize retirement, “every day is a Saturday.” Or in other words, every day is a free day. This is usually when people want to eat out, see movies, or go do things that cost money. So retirement becomes a tricky balancing act. (And even if you intend to have an active retirement, running out of money can put a damper on that…leading to the decline mentioned earlier.)
While you may have fewer expenses in retirement, like maybe you don’t have a mortgage or car payment, inflation takes a nasty toll. For example, say you make $100,000 right now. You think by retirement you can comfortably live off of a portion of that income, say $65,000. However, the inflation rate is about 3% and you want to retire in 30 years. In order to have the equivalent of $!00,000 in today’s market, you’ll need $242,726. That means your projected retirement income will need to be $157,772. That’s more than double that you will need to have saved per year for retirement.
That means that the $1 million you’re expected to save for retirement would last you less than a decade. Yet typical financial planners still suggest this as the ideal retirement “goal.” In truth, you should be saving as much money as you possibly can.
You Don’t Have to “Retire”
While the facts and figures are scary, we hope they illustrate one thing: it’s not realistic to retire at 65, nor should you want to. And fortunately, you don’t have to. While many people expect to retire when they turn 65, many people continue to work in some capacity. They may slow down, or switch career paths, yet they still find enjoyment in service. And it helps them remain financially independent.
In a recent CNBC article, Harvard-trained economist Laurence Kotlikoff shared that delaying retirement by even a few years would improve your financial situation drastically. And the longer you can comfortably delay, the better off your financial circumstances are likely to be.
He himself says, “As for me, I just turned 71. Fortunately, I have tenure and can keep doing research, writing books and columns and teaching. My current plan is to die in the saddle. My work is just too rewarding–-financially, intellectually and psychologically–-to give it up.”
The Power of Living Intentionally
While we don’t love the FIRE movement, because they advocate for early retirement, we do think that they do some things right. Namely, they don’t actually retire! Confusing, right? Yet it’s the truth. Many FIRE advocates sell the glamorous lifestyle of making lots of money so they can stop working…yet they still make money and work through social media and other means.
The reality is that rather than retiring, FIRE advocates are simply shifting focus to work that is more appealing to them. And you can do that too. We just choose to call this intentional living. It requires that you work hard and discover yourself so that you can ultimately find the thing that excites you.
While work can feel like a lot of work, it doesn’t have to. It can also be exciting, fulfilling, and fun for you. There’s a massive opportunity to change your worldview on jobs, and instead see work as a blessing. It’s a blessing for the people who benefit from your work, and a blessing to you, who benefits from having work.
To get more ideas on how to save money, find fulfilling work, and build wealth that lasts, subscribe today. You’ll even get a free book called Live Your Life Insurance. And if we can help you get started on anything today, contact us and we’ll put you in touch with a Prosperity Economics Advisor in our network.