“The MIT AgeLab was created in 1999 to invent new ideas and creatively translate technologies into practical solutions that improve people’s health and enable them to “do things” throughout their lifespan”.1 Since then, it has been instrumental in providing meaningful and comprehensible explanations of ageing and how to deal with the problems that are encountered while getting older.
The average worker who retires at 65 and lives another 20 to 25 years may spend 8,000 days or more in retirement. If there is no earned income during this period, the financial questions become: (1) how long can their lifestyle be funded through Social Security, pension, and withdrawals from accumulated assets? (2) Was this analysis performed before the retirement trigger was pulled?
8,000 days is a long time. Think about what everyday costs now. Apply inflation. Do you know how much money you might need to accumulate to fund the next 20 to 25 years?
It is true that over time, the nature of retiree expenditures may change. In the early years of retirement when health may be at its highest, travel and entertainment maybe the largest discretionary expense. In later years, healthcare expenses may take over as the largest expense – discretionary or otherwise.
One of the ways to increase the probability of adequately funding retirement, may be earning income during the retirement years or possibly postponing retirement altogether and working to an older age. While financially, this can be very helpful in funding retirement, Dr. Joseph F Coughlin, Director of the MIT age lab, raises an important point in his article 8000 Days2.
Dr. Coughlin suggests that working during what might otherwise be retirement years may create an illusory view of future retirement security. Consequently, retirement may not be considered an immediate issue of concern for some late in life workers and preparation for retirement may be given short shrift and postponed even further2.
Working during later years can be healthy financially as well as mentally and emotionally, but as with all important decisions, it should be made with an understanding of all surrounding facts and circumstances. Those facts and circumstances may include:
· The traditional transitional stages of retirement may be compressed into fewer years.
· Some of the traditional transitional stages of retirement may be omitted altogether due to the compression of available time and health.
· As age increases, there’s an increased risk of adverse health events which may force unplanned adjustments to a planned retirement lifestyle.
· Increasing age also raises the spectre of increasing frailness and decreasing cognition which may also further impact the retirement transition process.
So…what about working during the “retirement years”? Regardless of whether such employment is financially necessary or purely voluntary, we suggest that where it is being considered, it be included as a formal part of an overall retirement design to plan for strategies to address anticipatable obstacles that may arise.
If you would like to explore how to fit post-retirement employment into your retirement plan, we’d love to talk to you. Please contact us to arrange a complimentary one-hour consultation.
1. AgeLab | Center for Transportation and Logistics (mit.edu)