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Why You Should Never Retire

Is retirement a slow death and the beginning of the inevitable decline? Why you should never retire began from a conversation I had with a friend. He argued quite passionately that he would not even consider retiring! That was the last thing on his mind. I started looking into it and doing some research on my own. After what I dug up, I have to agree that a very strong case can be made to remain employed and active.

Retirement is not for everyone. Most people need something fulfilling in their lives. Or they simply can’t afford to be without a paycheck. Within a year or so, the majority of retirees are re-entering the work world to either supplement their income and/or stave off boredom.

Retirement Trends

Originally, retirement was designed to get rid of older workers with diminishing productivity and replace them with fresh younger employees. Back in the day, average life expectancy was only slightly longer than the age of retirement so it didn’t cost much to put the old horses out to pasture. Typically, by 65 they were worn out and happy to live out their remaining days in retirement.

A lot has changed in the past few decades. Now, we live longer healthier lives and 65 is no longer the mandatory age of retirement. You might have believed that if you worked hard and did a good job, your employer would reward your loyalty and commitment. Not so much anymore as older employees have become a liability on the books. They cost too much in salaries, benefits, and need to be replaced. We observe widespread downsizing and outsourcing with intent to minimize costs and maximize profits.

MYTH

Loyal Employees are an Organizations Most Valuable Asset.

The corporations are doing their best to force older employees out the door. Even to the point of offering packages to encourage them to leave. Although this is age discrimination (ageism), it is somehow justified because it increases shareholder returns. There are rare instances where more progressive companies value the experience, skills, and knowledge of their seasoned veterans.

Still, the dream persists that retirement is a good thing. The media bombards us with advertising portraying happy retirees taking vacations, buying retirement properties, and how you owe it to yourself to enjoy your “golden years”. It is portrayed as a reward to yourself after a lifetime of hard work.

Yet, this creates a dilemma as not everyone is prepared or even wants to retire. According to research by AP-NORC Center, almost a quarter (23%) of Americans don't plan to stop working ever. With increased life expectancy and rising costs, retirement is not always the rosy picture that we have been led to believe.

Reverse Retirement

Are you looking forward to putting your feet up and losing all those work-related stresses and pressures? The novelty wears off real fast and many retirees will re-enter the workforce in some capacity. Based on figures from the Federal Reserve Board, over a 1/3 of those who retire will reverse retirement either on a part or full-time basis. The Bureau of Labor Statistics notes that between 2014 to 2024, the labor force growth rate of 65 to 74 year old people is expected to be about 55%. This is in contrast with a 5% increase for the labor force as a whole.

These numbers surprised me and the trend appears to be growing. Apparently, retirement is not the bed of rose petals we expected or were led to believe. Whether you voluntarily retired or were forced into it, you may be contemplating what to do. It’s interesting to note that except when in dire financial need, baby boomers collectively are seeking interesting and fulfilling work opportunities. The challenge becomes how to leverage your skills and experience to find a job you enjoy. The following diagram may help understand the value you can offer.

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All your life experiences, knowledge, work ethic, and specialized skills reflect the value you bring to the table. This may be sufficient to re-establish a career in your field of expertise. It may also identify an area that is holding you back. Think of the pyramid as your base to build upon. For example, with some networking you might evolve into a consulting role. Perhaps working only as many hours as you choose. Alternatively, with some training and new skills you might launch yourself into an entirely new, exciting career.

Second Careers (Full-Time or Part-Time)

Before you pull the plug, is it worth discussing with your employer the option of coming back on a part-time or contract basis? Alternatively, this may be a discussion after the fact. You may be hesitant about jumping back into the rat race and prefer doing something that you really enjoy. It need not even be related to your previous career.

 A friend of mine became a “kitchen consultant” at one of those large hardware stores. Each day is new and exciting for him as he helps people design their new kitchens. With his strong communication skills, he connects with customers understanding their needs and creating a customized design they love. There are many interesting opportunities available out there that you may not have even considered. If you like being around people, become a driver for a shuttle or delivery services. Maybe becoming a tour guide would be more your thing? Understand that your experience and skills have value. There are options out there where you can earn money doing something you enjoy. More ideas are offered in what to do in retirement.

Encore Career

My perspective is that an encore career is a second career of something you have always wanted to pursue. Maybe you have always wanted to be an artist and now is the time in your life where you can make that dream come true.

In fact, an encore career is getting paid for something that you like, believe in and is a worthy cause that helps others. Typically, these jobs are in the non-profit sector focusing on areas such as education, health, social services, and the environment. Even if a paid position is not immediately available, consider volunteering to “get your foot in the door”. You’ll gain valuable experience and skills that may pave your way to the perfect job.

Entrepreneur / Boomerpreneur

With social media and the Internet, there may never have been an easier time to become your own boss. As a Boomerpreneur, you are in the unique position to leverage your skills and knowledge creating your own income stream.

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A recent study by the Census Bureau and two MIT professors determined that the most successful entrepreneurs tend to be middle aged. Interestingly, a 59-year-old was 4.5 times more likely to succeed than a 25-year-old. The reasons are our experiences, social contacts, and financial resources as they provide distinct advantages in starting a business.

Starting a business is not for everyone, yet it can be very rewarding. You will need to determine a product or service that people value. It’s going to take a lot of effort, time and stretch your ability to learn new skills. Possibly an on-line business could be the best option to consider, particularly if you have health or mobility issues.

Three Reasons You  Should Never Retire

One of the greatest fallacies is that retirement will be good, maybe even wonderful. Yet, there are numerous reasons why you should never retire. Who wants to survive on a reduced income for the next 20-30 years, grieve the loss of friendships, combat loneliness and boredom, and risk skyrocketing medical costs that can wipe you out financially? To be blunt, most of us shouldn't retire because traditional retirement is an outdated concept that has outlived its purpose.

1. Retired and Bored to Death

One of the greatest myths is that retirement will be marvelous and you’ll figure it out as you go. Far too many people slide into boredom, are lonely, and at risk of depression. In fact, according to a study by the Institute of Economic Affairs, the likelihood of depression goes up by about 40% after retiring.

The fundamental issue and challenge is replacing a 40-hour work week with something that you find interesting. Popular advice abounds with lists of hobbies or interests that you should pursue. While this sounds good, there are still an awful lot of bored people out there. The screenshot below captures a Google search for “retired and bored to death” with the top six things they suggest for combating boredom.

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An acquaintance of mine retired to Florida to “live the good life”. Within two years, he had sold his Florida property and returned. As he explained, “I was bored and felt I was wasting my life away”.

2. Benefits of Work

Losing a paycheck is bad enough; however, there are a bunch of other things that work also provides.

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Redefining your identity, finding purpose, and replacing the social interactions that work provided could prove challenging. As mentioned above, retirees are at higher risk of loneliness, and even depression, when these needs are not met.

Loss of Purpose in Retirement

With all due respect, you’ve probably never thought much about purpose and meaning. We have all rushed off to work each day for years and it’s not something that normally comes to mind. Even if you hated your job, it forced you to get moving each morning to earn that paycheck. Maybe, you took pride in your work and gained satisfaction in your accomplishments. In either situation, there was an intrinsic purpose gained through work. Once you retire, everything changes. For many retirees, their days become filled with meaningless activities, with the biggest decision being what to have for lunch or planning the trip to the grocery store. Happiness in Retirement provides further insights into finding purpose in retirement. It becomes a choice and is definitely not a given.

Another way to look at sense of purpose is offered by Neil Pasricha's "Four S's that will make you happier". These include social, structure, stimulation, and story.

  • Social is the quality of relationships you have with our family and friends. In fact, interaction with others is considered the most important ingredient for happiness. People matter and once you leave work, all those daily exchanges with co-workers and customers are gone.
  • Structure becomes your reason for getting out of bed each morning. If the only reason is taking your “meds”, you may want to reconsider. Without something to look forward to each day, your life can soon feel meaningless.
  • Fundamentally we are all creatures of curiosity and need to stimulate our minds. We need new experiences, both learning and growing to offset boredom. At work, whether we liked it or not, we were challenged with new technologies, changing policies, co-workers, and customers.
  • Story is making a difference and being part of something bigger than yourself. You likely were part of a work team tasked with achieving company success. After retiring, some choose to volunteer in a cause they believe to gain the satisfaction of helping others.

Loss of Identity

Who are you? In our society our self-identity is generally based on what we do for a living. One of the most common questions when you meet someone new is “What do you do?” That question helps us gain reference into whom you are speaking with. While it shouldn’t matter, it seems that your importance as a person is often associated with your occupation. You worked hard and are proud of your accomplishments. Then it may feel like all this is stripped away as there is little status being retired in our North American culture.

Our identity should have many layers, such as being a loving wife / husband, mother / father, good friend, active community member, etc. Unfortunately, identity often becomes solely intertwined with your career. When you leave work, feelings of self-worth can plummet and you no longer feel important or valued.

Work Colleagues are Not Your Friends

One of the most difficult things about leaving work is the people you leave behind. After spending eight hours a day, five days a week we become quite attached to our “work friends”. Unfortunately, the day you retire the majority of them seem to dissipate into thin air. Without that daily contact, the common bond is gone. This also extends to suppliers and customers that you have worked with over the years.

While there may be a couple of people you keep in touch with, your circle of friends dramatically shrinks. One of the benefits of work is the social engagement you have with others. If you are sitting at home, you are at risk of feeling isolated and abandoned. We all have different wants and needs however this social interaction needs to be replaced. 

3. Retirement Finances

There is very little appeal to living below the poverty line on social security. The primary reason so many contemplate never retiring is they have insufficient or no retirement savings. Being frugal and pinching every penny is does not make for a fun existence. For those that have saved, the financial experts suggest we can live comfortably on 70% of our previous earnings. This assumes your retirement is debt free and without a mortgage or car loan.

Most of us believe our costs will go down after retiring. For sure, some work-related costs will be reduced. These might include commuting costs, parking, fuel, car repairs, and possibly even reduced vehicle insurance. Unfortunately, your major costs will likely stay the same or increase over time with inflation. With all your new free time, there are likely lots of things you will want to do. Most people want to do some travelling which will dramatically increase expenses. Even day-to-day activities will add up quickly. Unless you sit at home and do nothing, you may very well find yourself spending more once you retire.

Retirement Savings

You may be one of the fortunate few that has consistently saved and feathered your nest egg for decades. It used to be that you earned a company pension, these are now a rarity. Financial planners generally recommend a minimum of 10 times your annual salary or even better, a minimum of at least $1 Million. Most of us have tried to put money aside, yet setbacks such as raising kids, career changes (even job loss), stock market fluctuations, and the housing market crash have limited our best intentions. Unbelievably, 45% of people have no retirement savings at all! For those with some savings, more than half have less than $250,000 (for more detail, see Baby Boomer Facts).

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Almost three quarters of retirees will become solely dependent upon social security within several years. This system is already strained to capacity with concerns of the rapidly diminishing funds. According to the Social Security Administration, “As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted. At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of scheduled benefits”.

Retirement Debt

Instead of retiring debt-free, we witness a growing trend of debt. According to Money.CNN, federal reserve data indicates average debt for those over 65 has ballooned 83% between 2001 to 2010. The Survey of Consumer Finances further reflect this alarming trend with an average debt of $31,300.00 in 2016.

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The lack of savings and incurring significant debt has forced many to continue working. Also, we have become victims of the car industry through the financing of our vehicles. Reverse mortgages and borrowing against homes have further eroded their financial health. For those that have retired, their income may be fully stretched just covering their monthly costs. When unexpected expenses arise such as medical bills, prescriptions, vehicle repairs, etc., it may create credit card debt just to get by. This can quickly spiral out of control.

Rising Healthcare Costs

If you have health insurance through your employer, this is of immense value! We have all heard the horror stories of medical cost nightmares that financially ruined people. Understand that once you retire you are on your own. As we age, healthcare plans become increasing expensive. The annual cost of a mid range plan for a reasonably healthy 55-year-old is around $5,100.00 and increases to $6,300.00 by age 60. While Medicare kicks in at 65; it usually covers less than half of your medical bills. This situation will likely worsen as Medicare’s fiscal issues continue. Supplemental coverage should be considered.

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Healthcare costs are skyrocketing and there is no relief in sight. According to Health Affairs “national health expenditures are projected to grow at an average annual rate of 5.5 percent for 2018 – 2027”. Perhaps you are wondering how that will affect you? According to Fidelity, the estimated cost of healthcare for a 65-year-old couple retiring today will be about $280,000.00 over the next twenty years. And that does not include nursing homes or long-term care.

Quality of Life and Longevity

Compared to previous generations, we can expect to live longer healthier lives. In the past, people retired at 65 usually passing away within several years. Now ,the average life expectancy has risen to 78. The interesting thing about average life expectancy is that it factors in all those that are gone. This means that if you are in reasonably good health, there is a good chance you will survive into your 80's, 90's, or even longer.

With the ongoing advances in medical treatment and healthcare improvements, longevity will continue to increase. This has many implications into your quality of life and stresses the importance of maintaining a healthy lifestyle. Further, people who delay retirement or never retire tend to live longer than those who retire earlier. This might be explained by the fact they feel their life has greater meaning, they keep more active, and are socially engaged. One study by the National Bureau of Economic Research indicates a 5-6% increase in illness and 6-9% decline in mental health after retiring. Other adverse health effects include obesity, mobility, and depression. The key is to remain active, social and engaged.

Summary

In conclusion, the purpose of “why you should never retire” reflects that retirement is not the lifestyle for everyone. The reality is very few of us have properly prepared for the next twenty to thirty years. Instead of retirement being a happy life of leisure and fun, it could possibly become a life of misery. I’m not suggesting you should stay at a job you hate; rather find and do something you actually enjoy and can have fun. 

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