You may be dreaming of making the leap into full retirement bliss, but it’s important to be realistic. For a number of reasons, you may need to keep working. Perhaps you need to continue building savings or it’s just too early – not everyone can afford to retire at 40. Maybe you really love your work.
Whatever your situation, here are some reasons you shouldn't retire yet:
Your work gives you purpose.
You don't have a post-retirement plan.
You haven't organized your life for retirement.
You're not in agreement with your spouse.
Your social life may suffer.
You will lose out on higher Social Security benefits.
You can't afford health care.
The stock market won't allow it.
You don't have enough money to retire.
Your Work Gives You Purpose
Steve Davis, CEO of Total Wealth Academy in Houston, is blunt about his views on retiring. “Sorry to be so honest, but retirement isn’t great," he says.
Davis retired at age 30 after investing in real estate and building a second stream of income, but he started working again after six months because he was bored.
“Retirement is not what you think. It is not the wonderful end game everybody tells you it is. You can only fish so much, you can only golf so much, you can only travel so much, and you start to wonder why you are here. There is not much happiness in just doing nothing or only doing things for yourself,” Davis says.
Of course, there’s a big difference between retiring at age 30 and at age 65 or 70. But Davis has some excellent points. After all, if you really love what you do, especially if you’re in good health or have more years to collect Social Security benefits, it may not be time to retire.
You Don’t Have a Post-Retirement Plan
Thomas Schulte, a certified financial planner and partner at Napier Financial, a wealth management firm in Braintree, Mass., says it’s important to “retire to something.”
“Most of today’s retirees are not interested at all in sipping drinks by the pool for the duration of retirement, and the ones that do generally fail from a personal, non-financial perspective,” Schulte says.
"Retirees need to retire to some activity that is mentally and or physically stimulating that they can build daily routines around. Most importantly, this idea of what you’re retiring to must be identified well in advance of formally retiring,” he adds.
In other words, if you don’t know what your life will look like after you retire, you probably aren’t ready to stop working. Unless you are rich, you certainly can’t budget for a life that you haven’t figured out.
You Haven’t Organized Your Life for Retirement
There is so much to think about and prepare for when you retire. You may feel like you have enough money to live on, but do you have an emergency fundfor unexpected expenses? Are you planning to travel, and do you have enough saved to go on these trips?
If you want your retirement to be comfortable, it's a good idea to have a sense of what your day-to-day life is going to look like.
You're Not in Agreement With Your Spouse
If you’re married, are you and your spouse in agreement about retiring? With any luck, you are both equally excited about the idea.
Still, even in the best of marriages, retirement means life changes are in store for you both, and you’ll want to discuss those changes to maintain your marital harmony. For instance, if you’re retired but your spouse will continue to work, hopefully you're crafting a plan to help out more around the house.
Your Social Life May Suffer
When you retire, you'll say goodbye to socializing in the office break room and the daily or weekly Zoom calls. If you’re looking for a reason to stay on the job for a while longer, consider what retirement will do to your social life.
Yes, the counterargument is that with no job, you’ll have more time to make non-work friends. But if you’re looking for a reason not to retire, think about how much you’ll miss your work buds.
You Will Lose Out on Higher Social Security Benefits
As you’re probably well aware, you lose money in the form of Social Security benefits if you retire before age 70.
According to the Social Security Administration, if you retire at age 62 rather than waiting until the full retirement age of 67, your benefit will be reduced by about 30%.
Still, it can be a complicated decision. If you retire at 62, you will receive Social Security for a longer amount of time in your life. But generally, experts suggest that if you’re in good health and if it’s feasible, it makes financial sense to wait to retire until you’re 67. In fact, if you wait until age 70, it’ll be even better for your wallet: You’ll get 132% of your monthly benefit.
In case you’re wondering, there is no financial benefit to holding off on collecting Social Security after age 70. You can collect those benefits and continue to work.
You Can't Afford Health Care
You really want to think about this if you’re considering retiring early and aren’t yet eligible for Medicare.
“One of the major deterrents to early retirement is the potential loss of employer-sponsored health benefits,” says Andrew Latham, certified financial planner and director of content at financial comparison and education site Supermoney.com.
“For those considering retirement before 65, this can be particularly daunting,” Latham says. He points out that you might be on the hook for potentially thousands of dollars while paying for your own health insurance premiums and out-of-pocket expenses until you become eligible for Medicare.
“This doesn't even account for any unexpected medical events. These substantial costs, if not accounted for, can rapidly deplete retirement savings,” Latham says.
“If market conditions are unfavorable around your planned retirement age, it may be wise to delay retirement, allowing your portfolio some time to recover,” Latham says.
You Don’t Have Enough Money to Retire
This is the best reason not to retire yet. You simply may not have the money.
If you decide that you should keep working, don't be too hard on yourself. “All in all, I do believe that people retire too early,” Schulte says.
“We are firm believers that you need to enjoy your life as you age and spend less time in a professional setting. However, individuals that do this with a set plan and long transition seem to fare the best. Retiring from a lifelong career in a mentally stimulating environment to nothing has been more detrimental than positive in the cases we have seen.
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