Why Continuing to Earn Makes It Easier to Retire

Traditionally retirement meant no longer working. Traditionally retirement also meant you only had a few more years to live and that you were reaching the point where you could no longer make a valuable contribution. Well times have changed. People are living longer more productive lives. Does that mean that people should no longer retire? Does that mean that people should no longer enjoy the fruits of their hard earned labors? No what it means is that the definition of retirement needs to change. The new definition of retirement allows one to continue working but at a more relaxed pace. Retirement will now mean spending more time on personal interests and less time on work, not total abandonment of participation in the workforce. In our article on How Much You Need to Retire we look at the current thinking of trying to live off of a yearly withdraw el of 5% of your retirement savings. What this means is that for every dollar you continue to earn in retirement you need $20 less in your retirement savings to maintain the same standard of living. This 20 to 1 factor is huge. Earn $10,000 a year and you can have $200,000 less in retirement savings. For most of us who have put aside to little over the years or who saw a large portion of the value of our nest egg disappear in the dot com bubble this 20 to 1 factor makes the prospect of retiring at a reasonable age much more attainable.

The is another factor that is often overlooked when we think about work and that is our sense of belonging and active participation in society. For many of us work is an important part of our identity. The social contact, the sense of participation the sense of contribution all play an important part in our sense of worth. For some their long pent-up interests and pursuits can more than compensate for anything that work supplied but for many work plays a key role in who they are and how they feel about themselves. One thing to consider is that in retirement the goal is to work less and the need to earn a large amount of money is less so that you should consider this as an opportunity of think about the type of work you want to do. What skills and knowledge do you have that you might not have been able to apply to your previous position. How can you participate in the functioning of society when money is not the primary motive? These are all things to consider when you start to plan for your retirement. Where you want to work or what you might want to do can effect where you want to retire to. You might want to do a two phase approach. For many cutting back on their workload within the same organization is the most viable alternative. They then can pursue other interests that may eventually lead to a change in their work situation. The path is varied and there are many more alternatives open that you can imagine at first glance. The bottom line is that if you consider retirement not as a cessation of work but rather as another phase in your life where work plays a different role then you are on your way towards preparing for a happy and successful retirement.