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Don't Retire Too Early


I don’t think you should retire too early.  Heck, maybe you should never retire.  While every other advisor wants you to retire, I don’t.  The entire financial services industry is chomping at the bit for the “wave of Boomers” to retire over the next 20 years, and I’m sure it has nothing to do with selling annuities and other high-commission products.   Personally, I think it’s a bad idea to retire too early and let me share some thoughts why.

Before I jump into this, yes, not everyone has a choice when it comes to retirement.  I understand there are health reasons or maybe your job was eliminated.  However, many people have the ability to control whether they retire in the “traditional” sense.  

  • I say “traditional” when it comes to retirement because retirement is still a new concept. A little over 100 years ago almost everyone over 65 still worked. I’m not saying that is a good thing.  What I’m saying is retirement is still a rather new concept we’re still figuring out the best way to retire.

  • I’ve talked a lot about compound interest and starting early when it comes to saving.  Delaying retirement from age 62 to age 70 can have a similar impact. Studies show it could cut your required savings rate by 2/3. The longer you can wait to draw on your retirement savings the longer it will have time to continue to grow for when you need it.

  • Keep working to help your brain.  Seriously.   A large study showed that short-term memory declined almost 40% faster when people transitioned from working to retiring.   It seems working helps when it comes to “use-it or lose-it” with your memory and staying cognitively sharper.

  • Nearly half of respondents in a study showed they are concerned about dementia.  See point above.

  • An analysis of 292 different retirement income strategies showed the best way for people to withdraw money in retirement.  A big factor includes delaying taking Social Security until age 70. This is consistent with a point a couple above.

  • This is for all you guys – Retired men were 40% more likely than employed men to experience depression. I don’t think it has anything to do with their golf game either.   Unfortunately, I did not see any data for women.

  • Is work your identity?  Let’s be honest as many people tie these two together.  Shifting into retirement can mean a significant change in what gives you purpose. Start preparing early to find a new purpose.

In another post I’ll share some thoughts of what I’ve learned over the years from clients on how I feel someone should approach retirement to make it what they want it to be.  Hopefully you pick up a nugget or two as I’ve learned lots over the years.