Many times I have had people tell me, “If I am not financially prepared for retirement when the age comes, then I’ll just keep working.”
Close your eyes and picture yourself at age 72. What does your life look like? Do you have grandchildren? Have you moved—maybe downsized or upgraded, or perhaps gone to a new area altogether? Is your social life active? What do you do in your spare time? Now here’s the big question: in your vision of yourself at 72, do you still go to work every day?
Maybe you do, and it’s because you love working and you love your job, and you choose to keep your career in your vision of your future.
But maybe you don’t see yourself working at 72. Maybe your plan for yourself isn’t to continue going to work every day at the age of 72. But maybe you have to because you aren’t “financially prepared” and so you “just keep working.”
No matter what we envision for ourselves, the real truth is that no one of us can work forever, and subsequently, the backup plan of “just keep working” isn’t a sound one. If we do keep working past retirement age, by choice or by necessity, there are generally three scenarios that could lead to an unplanned need to stop working:
1. My health
No matter how well we take care of ourselves, there are certain things we can't control. There may be a health issue or an injury or accident that may affect our ability to continue to work. Any number of illnesses or disabilities can surface, and at any age. If something of this nature happens, will you really be able to continue with your job? Additionally, will you be able to cover the medical expenses that accrue?
2. My spouse’s health
More often than not, the reason many of us leave the workforce is to care for a loved one. Even if you dodge the health crisis bullet yourself, your spouse or other close family member might not be so lucky. Taking on the role of caregiver can mean leaving or reducing the time spent on your job, which can in turn lead to the challenge of having less money saved for retirement and in Social Security.
3. My company’s health
Companies go through changes, just like we do, and many times those changes are not predictable. Companies merge, close, downsize, move and so forth. In addition, some companies might even have a mandatory retirement age. A company’s any decision could impact our income and employment status, regardless of whether or not we are prepared to stop working.
The point is, whether we want to stop working or not, there will come a time in each and every one of our lives when we have to call it quits on our career. The timeline might not be in our control, but our financial preparedness, on the other hand, is.
Those of us in the financial community have the responsibility to talk to clients about that next phase in their life—their “encore.” Take clients through the exercise of envisioning where they will be and how their life will look at age 72, and be sure to have them answer the critical question of whether they will be working at that time or not. It’s a very simple, and sort of fun, exercise that can segue seamlessly into a conversation about their financial plan and making sure that they are in a position to make their vision more attainable. There are too many unknowns to take a gamble with our retirement and savings. So the next time one of your clients says that they will “just keep working,” remind them that that recourse should be their option, not their obligation.