Most workers approaching their retirement years haven’t saved enough money to retire full time at age 65 and continue their current level of spending. Let that disturbing conclusion sink in for a while.
Unfortunately, many workers haven’t realized this fact and have unrealistic assumptions about when they can retire and their standard of living in retirement. If they were to “do the math,” they’d find that they may need to work longer than they’d hoped, reduce their spending in retirement, or do some combination in order to afford retirement.
Neither of these facts needs to be a bummer. If you’re in your late 50s, 60s, or even 70s—a period I call your “second middle age”—you can still live well with a little creativity and resourcefulness. Let’s look at some strategies you can use to plan for a good life in your retirement years.
Find Tolerable Ways To Extend Your Work Life
If you don’t have enough money to retire full time and you need to continue working for a few years, then a more realistic strategy might be to fix your work life to make it more tolerable, even enjoyable. Most people in their second middle age still have enough health and vigor to continue working, although they may want to work differently compared to their career years.
One option is to reduce your work hours to part time or seasonal to free up more time to enjoy life. Your current employer might let you do this if you’re on good terms with them. One advantage of this idea is that you might be able to continue your current employee benefits, including healthcare.
One goal can be to work part time to earn just enough money to pay for your living expenses. This can enable your savings and Social Security benefits to increase until they’re sufficient to fund a full-time retirement. This strategy goes by a clever name—Coast Fire. With the Coast Fire strategy, you might have more time to travel and for enjoying your interests and still feel like you’re retired.
There are other ways to make work more enjoyable. For example, see if you can reduce the tasks or projects that you don’t like and increase the projects you do like. Or maybe you take on less responsibility in order to reduce your work stress.
Another stressful and time-consuming aspect of work is the commute. Can you find ways to commute less, either working remotely completely or traveling to work fewer days in the week?
One more idea is to gain more control over your schedule, so you can work when you want to. Perhaps you can take time off during slow periods at work or only work seasonally. The ultimate in control might be to work as a contractor or start your own business.
As you can see, just because you may need to work longer doesn’t mean you need to continue working in the same intense way you might have worked in the past few decades.
Can You Reduce Your Spending And Still Enjoy Life?
Most likely, your life will change significantly in your retirement years. As a result, your spending might also change, so you’ll want to determine now how your spending might decrease or increase once you’re retired. For example, your living expenses might be lower if you raised a family and your children are now living independently or will be in the near future. On the other hand, you might want to spend more money on travel or pursuing your interests.
Also take a look at how much money you’ll need to meet your living expenses and still be happy. For most retirees, housing and transportation are their two largest living expenses. To reduce these, you could consider downsizing your home or moving to a less expensive area. Another win-win move would be to use public transportation more and own only one car (and drive it into the ground before replacing it).
My wife and I approached our mid to late 50s physically healthy but burned out from working all our lives. And we couldn’t afford a traditional, full-time retirement at the time. So, we adopted the strategies discussed here and are still going strong in our early 70s. We’re travelling and spending time with our grandkids. The extra income from our part-time work enabled us to delay Social Security benefits and postpone withdrawing from our retirement savings until we turned 70. We’re confident that our retirement years will be financially sustainable no matter how long we live.
The strategies described above may not be for everyone, but living a long time in retirement means you’ll need to be resourceful and creative to find your path to living long and well.
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