Career: How long are you willing to work?

There was an interesting press release recently from The Saga Annuity Service about how people are working for longer in life around the world. Some of the facts that impacted me were:

• 31% of men and 29% of women say they have come to terms with working past 65 years old
• In 2012 the average retirement age for men was 63 years and 303 days

That is a pretty long career!

 

As you know, I have been working towards early retirement ever since I graduated from college, I wanted to make an early exit so I could enjoy life and do things that mattered to me, instead of sitting in a cubicle from 9 to 5 every day for the next 40 years.

And as I was on my journey, I first thought it would take me 20 years to retire, meaning an early retirement around my 40th birthday. That would still be some 15 to 20 years early than most retirees, and the goal seemed reasonable, but as I spent more time in a corporate setting, I knew I wanted out even earlier.

Mind you, early retirement is not that complicated. You just need to save a good chunk of your income every month, and invest it wisely so it generates some more income in return. As we are now living longer than before, you need to make your calculations so you do not outlive your investments.

You can project your nest egg assuming a 4% withdrawal rate, considered safe by most investors, or opt for an annuity, that will give you a guaranteed amount every year until you pass. I generally plan on a 95 year life expectancy, leaving something behind still.

Other options include reverse mortgages and other creative ways to keep your assets while you live and still get some cash out of them.

 

But back to working longer. I think there are a couple of reasons why people work longer. First, we have more needs than the previous generations. And I don’t say needs in a good way, because most of them are not really needs. Spending a month worth of work into the last generation laptop when your old laptop still works? Your grandpa wouldn’t know what a laptop is in the first place. Family weekends used to be fishing trips with a picnic by the river, now they are getaways to a distant city and trips to the mall.

The more you spend, the more you need to work to pay for that spending.

Another reason I think people work longer is they do not know what else to do. We are taught by society “that is what you do, you graduate, you get a job, a wife, 2.3 kids and a mortgage” and we follow the trend. Many people who retire get into depression because they have lost their sense of worth. On the contrary, I believe retirement should be the best period of your life, celebrating your accomplishment and enjoying your family, loved ones and hobbies.

 

We are more productive than our grandparents. They had to spend hours chopping firewood, we have a home thermostat for £30 a month. We only need to work one or two hours to pay that bill, so we have more free time, or more money than they did. If we invest carefully, we should have an even better and earlier retirement than they did.