Why Working Longer Isn’t Always the Best Retirement Strategy

There are many ways to prepare for retirement, and all of them invite degrees of uncertainty. The one that may seem like the surest bet is simply working into your retirement years, remaining in the workforce and drawing a regular income well past age 65 or 70.

This is a strategy that makes sense to a lot of people. Unsurprisingly, seven out of 10 Americans say they plan to work for as long as possible. In some cases this will work out well, but for other workers, it won’t end as hoped, and may not be the best retirement plan.

The Benefits of Working Longer

To be sure, there are benefits to remaining in the workforce longer:

1. You delay the day when you start drawing down retirement assets.
2. You remain on your employer’s health plan longer, minimizing healthcare costs.
3. By staying engaged in your work, you may also maintain strong mental and physical health.
The problem is simply this: Life doesn’t always go the way we plan it, and unexpected occurrences can derail your plans to simply work into retirement.

Expecting the Unexpected

In fact, many who want to continue working end up unable to—due to illness, downsizing, or the need to become a full-time caregiver to an aging parent or spouse. Three out of 10 Americans have to leave the workforce sooner than they expected; a quarter of those cases stem from health concerns.

While working later into life can help defray retirement expenses, it’s not something that can be counted on—and for this reason, it may be a poor alternative to developing an actual retirement savings plan.

Planning for All Contingencies

To put things a little differently: Working longer is not going to be an option for everyone. It may be an option for you, but there’s no way to know for sure. By contrast, saving is something that’s available to anyone—and it’s never too early or too late to start setting aside money in a retirement plan. You can still work later into life if you want to, but a good savings plan will help you cover for all potential outcomes and unforeseeable circumstances.

The best way to begin is by talking it through with a financial advisor. Start your retirement planning today by contacting a member of Stonepath Wealth Management and scheduling a consultation.