Is Working Longer A Practical Solution?
Brett Arends dove into a study that concluded working longer to let your retirement account grow and to let your Social Security payout grow isn't very effective. Based on the people studied, the wages might be too low to make the tradeoff worthwhile and their retirement accounts were so small that a few more years of growth wouldn't have resulted in game changing account balances. I'm not sure how representative the sample of people was but it might not be an apples to apples fit with a group of people engaged enough in their financial planning that they read investing blogs. People who read blogs, if they have any worries about their planning are more likely to have higher incomes, decent account balances that may not be able to withstand unexpected outcomes, true personal Black Swans. A couple might think they need $20,000/yr from their retirement savings, have $550,000 and be ok relative to what they can reasonably expect. But then something happens with a relative that they have to be involved with that turns out to be expensive, that coincides with a 20% decline in the stock market and then they might be in trouble. That's just based on observation, not data.
If you're lucky enough to be pretty good shape relative to your financial plan (a little ahead or a little behind) then this becomes more about problem solving. I like to talk about prevent or solving your own problems and of course that pertains to retirement planning. Anyone can run into financial troubles like an expensive relative, coming close to what you think you need but still a little short, an unexpected health event; the list of examples could be endless.
You can't prepare for every possible negative occurrence you might confront but you can improve your overall resilience to help you overcome adversity. These are all things we've talked about many times before but we all know that not enough people spend time trying to get out in front of any potential problems.
Live below your means. You can save more money and you have a smaller nut to replace if something happens to your primary source of income. It goes without saying too that if you make $200,000/yr and live a $100,000/yr lifestyle you will have more optionality on many fronts including realizing at 45 or 55 you are done working for someone else or done living someplace you no longer want to live.
What if you love your job? Does being some age necessarily mean you have to give it up? Other than maybe being an airline pilot, there aren't many careers where you must retire at a certain age and even with pilots, being a private pilot might be possible (any pilots reading this, please correct me if I am wrong). If you love your job then you're probably giving it a pretty good effort and chances are that effort is being rewarded at least partially which would make you an outlier versus the study where people were not making a whole lot of money.
Solving or preventing your own problems in this context has a couple of meanings. First is to think about what would you do for money if your primary source of income dried up or what would you do if at a certain age you wanted to leave your primary career to do something new or you knew you needed some sort of income stream in your 60's and maybe into your 70's to help bolster the amount you'll bring in from Social Security plus portfolio withdrawals. I've been referring to this for years and monetizing a hobby. We've also looked at various types of seasonal work that might be a lot of fun (for me, this might be working in some capacity at a National Park) but is very finite or something where you really work your behind off but for a much shorter period, I remember one blog post from years ago about seasonal workers for Amazon around Christmas time. I think it was about two months of grueling work but with lots of overtime. A little less dramatic would be all kinds of part time, year round gigs that would supplement income but still leave plenty of time for other things. Actually monetizing a hobby, like making something artistic, will take years of planning and getting better at what you do. You can't rely on being an overnight success. If any of this is relevant to you, start planning now. No matter what age you are and no matter how far you are from retirement start planning and learning now. If the thing(s) you enjoy doing can be monetized then you want to figure out how to do that well ahead of time.
How we take care of ourselves as we get older is crucial to positive outcomes preventing problems. Phil Pearlman is starting to explore what he calls the convergence of health and wealth planning. We have been looking at this for years on this page. I'll qualify this by saying everyone should do their own research. Anything I say, I am applying to my own life based on research I have done. Just about everything that kills us can be connected to inflammation, insulin resistance or a combo or the two. There are behaviors that reduce inflammation and promote insulin sensitivity (the opposite of insulin resistance). You already know what to do, it's simple even if not easy. Consume less sugar (carbohydrates= sugar), cut industrial seed oils and lift weights. Lifting weights done with the right intensity (this mostly means very little time between sets and using weight heavy enough to go slowly) provides the same benefits as cardio with the added benefit of building muscle mass. We naturally start to lose muscle mass in our late 20's (it's true) and this is what ultimately causes frailty. Quite obviously and unfortunately, become frail, regardless of age greatly reduces the ability to prevent/solve problems and greatly hampers the quality of life. Cardio does not help mitigate frailty.
There is also the financial aspect to the convergence of health and wealth that we've talked about which is the money saved by not having to take prescriptions. We've all seen the grim statistics about average amounts spent on prescriptions and the hundreds of thousands of dollars people should expect to spend on health care in their retirement. People as young as their 50's (I'm 54, I think of 50's as young) are already spending money on a lot pills to treat conditions that could be reversed with the above behavior modifications. Google this if you don't believe me, but in many instances Types 2 Diabetes can be reversed. Not all instances maybe, but many. If you have T2D, why wouldn't you at least try to reverse it? Cut sugar and start lifting weights and see what happens to your numbers after a month. Again, Google it.
The list of metabolic benefits to cutting sugar and lifting weights is almost endless. Follow @mangan150 on Twitter to start learning more. Losing fat, both the kind you can see as well as the kind you can't see (visceral fat) along with making your body composition more muscular can actually reverse certain aging markers. Again, do not take my word for it, Google it and look at @mangan150's feed. Put more simply, if you are putting in the work that results in looking younger on the outside, then there is a good chance you will be younger on the inside. It is not too late to start but you have to start. If you do start and stick with it, you are likely to see the biggest improvements early on in terms of how you feel, how you look, metabolic improvements and being able to lift more weight pretty quickly.
All of this prevents or solves many problems of aging or at the very least delays them for a long time. This will improve your quality of life to an older age, give you more options for work if your financial plan totally, sadly falls apart and will make you less dependent on needing help from others for basic tasks.
Health and wealth are inexorably linked to each other. Success with the first one leads to better outcomes with the second one.
Here's a blog post from @mangan150 to check out.