65. This used to a magic retirement number. It was so embedded within our cultural dialogue that almost every retirement planning book written prior to 2008.
2008 became a watershed year in our economic history since the stock market crashed. But that’s not the main reason why 65 will be extended for most.
Three other reasons are larger:
- Longevity We are all living longer. 1 in 4 who make it to 65 will live past 90. My guess is that the number will shift to 1 in 3 soon enough.
- Money: The majority of those living in Connecticut will not have pensions. It used to be that pension plus social security plus savings were the three prongs of retirement planning. One prong is now missing.The incentives to wait until age 70 for social security withdrawal are significant enough that most people should wait until then before taking social security benefits.
Moreover, everyone should learn the math behind compound interest. If you do, you will discover that earning enough to pay your bills after you have built a reasonable nest egg will be enormously beneficial.
For example, a 40 something career counseling client from West Hartford, Connecticut discussed his $100,000 401(k) in the context of quitting his job next year. Unfortunately, $100,000 won’t grow much. At 5% growth, next year would yield $5,000.
If he builds a nest egg to $500,000, which is reasonable for those who are 65, and then works until 66, that $500,000 will grow to $525,000 with a 5% rate of return. In 5 years, the nest egg would grow to $641,000.
3. Good work is healthy. There is also a non-financial reason for people to work longer than 65. Work – at least purposeful work – is healthy. Good work is good for you.
So given the length of your career, find work you love.
If so, you will love your life.