Typical financial planning practices encourage people to approach their money with the end goal in mind: retirement. The problem with this approach is that retirement isn’t the end! If you retire at around 65, life can continue for upwards of 40 years if you’re lucky. This is also generally how long people spend working over their lifetime if they enter the workforce around 20.
When you think of it this way, it doesn’t quite seem possible that you can save enough money to live off of without working past 65 (even if you spend money wisely in retirement). A million dollars may be a lot, though it’s far less than you’d want for a good long retirement. And there’s the trick: you don’t know how long your retirement will be.
So what’s the answer? We think it’s time we started rethinking retirement.
Why the Normal Retirement Age Should Not Be Normal
Some time ago now, we wrote a post about how 87 is the new 65. Essentially, retirement was a concept created long ago to support those who were older than the life expectancy of the time. Before that, it was just expected that most people worked until they couldn’t. (Though the nature of their work likely changed over the course of their lifetimes.) It was the government who believed those who lived past the life expectancy had more than done their share of work, so they would be taken care of.
This inevitably morphed into pension plans and government-sponsored retirement, as well as employer-sponsored programs. And while life expectancy has increased significantly, this conception of retirement has not.
This has, unfortunately, done some damage, because it’s really skewed people’s perspective of retirement and work altogether. For one, it takes people “out of commission” well before their time. Think about the 60-something or even 70-somethings you know personally. We’re willing to bet they’re full of life and energy and passion. Retirement removes people’s outlet for that energy. Regardless of the financial impact, it’s not good for people to go from 100 to 0.
The other problem with this is that people know that once they retire, they could have 10 more years of life, or 40. It’s hard to save for that when you’ve got expenses all along the way. This puts so much pressure on people to work themselves to the point of burnout from their 20s through their 50s. It’s no wonder people want a break!
Money Needed to Retire
Speaking of the money needed to retire, it’s important to consider that even those who diligently save into a 401k from the age of 20 still might not have enough. Apart from the taxes and fees that greatly reduce the total account value, accumulating enough money is a struggle enough. After all, you’re looking at 40 years of income-earning to supplement 40 years of non-income earning. The problem is that during your first 40 years, you’ll still have to pay all of your bills and taxes.
Most people shoot for $1 million because that’s what their financial planners tell them. In reality, $1 million is an arbitrary number. It sounds like a lot because most people don’t have that much sitting in an account. Yet, if you make $100,000 a year, you’ll have $4 million pass through your hands over 40 years.
This isn’t to discourage you—any money you save is good. It’s a good habit to have, and it’s something we encourage. Yet, it can be more effective if you reconsider what retirement means to you, and allow that to reshape how you view your working years, too.
Where the FIRE Movement Failed
If you’re not convinced, take the FIRE movement as an example. FIRE stands for “financial independence, retire early.” The idea of the movement was to help as many young people as possible amass a large sum of money so that they could then retire. This gained a lot of momentum and popularity because who wouldn’t want to retire early in our current work environment? (Which, as we’ve discussed, has something to do with our retirement culture.)
The funny thing is, people in this movement weren’t actually retiring. They were simply working hard for a few years to build a business and make money. Then they scaled down their personal responsibilities so they could work LESS. So many FIRE advocates never retired, they just changed what their idea of fulfillment looked like, and made it happen.
Interestingly, one of the early pioneers of the FIRE movement is going back to work, 10 years from the date he retired. In 2012, he “retired” at the age of 34, with a Net Worth of $3 million. While technically he still did some work during this time, now in 2023 he’s back to full-time work. In addition to feeling like he lacked purpose, Sam Dogen’s stock-correlated assets also took a significant hit. In order to ensure his kids can attend college in another 10-12 years, he knew it was time to return to work.
While this definitely says something about where you store your financial foundation (NOT in stocks), it also proves what we know to be true. People want to feel purposeful, and even a few million dollars won’t last forever.
Reframing Your Retirement Mindset
So, what’s the solution to this retirement problem? It requires a complete paradigm shift. In fact, we wouldn’t mind if you removed retirement from your vocabulary altogether.
It starts with deciding that you’re not going to retire. Now, don’t get us wrong, there will probably be times when you slow down or shift gears. Yet we want to encourage as many people as possible to work for as long as possible. This can be beneficial to your cognitive and physical function as you age because it keeps you purpose-driven. When people lose their sense of purpose and become stagnant, their minds and bodies experience a decline.
When you start your working years with this mindset, it can eliminate a lot of stress and fear. Of course, you should still save and work hard. Yet, you don’t have the same “threat” looming over your head. This can allow you to create more balance all along the way. You don’t have to be afraid to take those vacations or go on that trip you’ve been wanting. Weekends can be for your family and friends, rather than more work time. Choosing not to retire allows you to live without missing out just so you can live a decent life in 40-50 years.
We think this is a powerful way to live, especially when you couple it with the desire to seek more purposeful work.
How to Stay Busy: What to Do “After Retirement”
As we’ve established, there’s some wisdom in choosing to never retire. However, you will likely still experience career shifts and other changes that inevitably come with life. In your 70s, you may desire a much slower pace, such as part-time work or remote work. This is okay!
We also recognize that many people retire from a career they’ve held for decades, and then keep working in a different field. So, what do you do after retirement, in this case?
Working After Retirement
Ultimately, what you do “after retirement” is up to you and your lifestyle! Some people find that they really can stay involved in the same career for their whole adult life. In fact, several members of the Prosperity Thinkers team have family members who still work well into their “retirement.” One has a great uncle who still runs a very successful business in his late 80s.
Other people are less inclined to do the same work or want to do similar work in a different capacity. For example, you may not want to do heavy physical labor after you turn 65. Yet you could move to an executive position. Or, you go from board member to community member, and you help out around your neighborhood with organizations you love. Check out our “Cash from Scratch” guide for more money-making ideas.
We know the idea of never retiring may seem a bit intense, yet truly you can choose to stop working, too. So long as you don’t choose to retire from purpose, you’re embodying the never-retire mindset.
The only “right” answer is to do something you enjoy, that makes you feel purposeful, and that feels sustainable for you.
How Are You Rethinking Retirement?
Are you ready to choose the path where you never retire? Our team would be thrilled to help you create more opportunities by helping you save into a whole life insurance policy. Doing so can put you in a position of cash so you can enjoy opportunities and weather emergencies. Ready to get started? Book with us today, or email your questions to email@example.com.