Unconcerned About Accumulating Retirement Funds; I Plan to Work Indefinitely. What Could Possibly Go Awry?
In the realm of retirement planning, a strategy known as the 'Me-First' Rule of Retirement Spending is gaining traction. This approach encourages individuals to prioritise their own needs and wants over those of others during retirement.
Planning for the long-term, rather than the day-to-day, is crucial for ensuring financial stability in the remaining years. Michael Conrath, the Chief Retirement Strategist at J.P. Morgan Asset Management, emphasises this point, stating that planning for the window, not the date, of retirement is of utmost importance.
But what about those who wish to continue working beyond traditional retirement age? Five wealth-building moves can be made in retirement to continue growing one's savings. One such move is adopting a phased retirement, where hours are gradually reduced or part-time work is taken on. This can be a more realistic plan instead of working forever.
However, it's important to note that there are several factors out of your control that can derail a 'work forever' approach. Layoffs and downsizing can occur, making it difficult to find a comparable salary or job. A change in job dynamics, such as a new boss or company management, can lead to disliking one's job. Illness or caregiving responsibilities of family members can derail plans, as can health issues or disabilities. On average, retirees retire three years earlier than expected.
Despite these challenges, saving early and often is the recipe for success in retirement. In fact, only 28% of retirees hit their target retirement date. To mitigate these risks, it's essential to plan for the unexpected and have a backup plan in place.
Another factor to consider is the impact of time on one's career. Becoming obsolete in one's field is a risk with the passage of time, requiring ongoing education to remain relevant.
The factors influencing the planning of a phased retirement can include financial requirements such as pension income and savings, legal and administrative conditions like visa or retirement authority rules, health considerations, and personal or family circumstances such as desired lifestyle and location logistics.
Working until you're 70 can result in a 30% increase in Social Security benefits. Additionally, working until 70 means less time drawing from your savings and more time for your savings to grow.
In conclusion, planning for retirement requires a holistic approach, taking into account both financial and personal factors. It's essential to save early and often, plan for the long-term, and be prepared for the unexpected. By doing so, individuals can ensure a comfortable and secure retirement.
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