Don’t Assume Retirement Is Age 65 or Later

The world has changed. I don’t know about you, but I was told my life would be a certain way. I would go to school, get good grades, go to a good college, get married, buy a house (use run on sentences), have children, work for a company loyally for 40 or so years and then “retire” at age 65 with a pension and social security and live out the rest of my years in ease and convenience surrounded by loved ones, travel and good times and die pleasantly in your bed before age 75.

Ok—so where are we, really? We change jobs every three to seven years, pensions are for unions and government workers only, social security is near bankrupt  because we live an average of 19.7 years in retirement and the average retirement age is age 62. That’s right, I said 62. Seventy percent of the population retires at 62, not 65, for two main reasons:

  • There is no work
  • You are sick and cannot continue to go to a job or run your business

That does mean that 30 percent do continue to work past the age of 62; those who do have their health and have opportunity.

So what does this mean for you and your planning? A few things, actually:

  • Always keep your resume ready. A job change is never far away. Better yet, always be ready to start a business. A job is a world of risk. You can be hired and fired at any time.   A business is powered by you and controlled by you in part (please don’t laugh, my fellow business owners).
  • Always save 20 percent of your gross income. The government and your fabulous company will not be funding your golden years. If you do this for 25+ years religiously and invest reasonably, you should be able to pull back to part time or stop working completely and maintain your lifestyle. The earlier you start this, the quicker you can pull back if that is what you desire.
  • Selling your business may take a while. If you own a business and are planning to sell it for retirement cash, please remember that you are one of millions of people selling their businesses at any one time and it may take years or never happen at all.
  • Think about your cash flow. When you are saving for retirement, or planning for it, think in terms of cash flow, not a lump sum of cash that you need to survive. For instance, if I need $12,000 a month today for my lifestyle, how can I create that in passive income streams? $2,000 in real estate rental income, $3,000 a month from the sale of my business as an installment agreement, $2,000 a month from a cash value life insurance policy, $2,000 from social security, $3,000 a month from an annuity from mutual fund retirement investments—you get the idea.
  • Assume retirement is by age 62 just to be safe; this gives you the option of working longer, or not.
  • Assume you will be funding a 30-year retirement.
  • Prepare for drastic health changes; remember that 35 percent of the population retires by 62 due to deteriorating health conditions.
  • Do not take out a mortgage that payments will be due past age 62. How will you handle the payments if you can no longer bring in active income?

These are a few of the best practices that can prepare you for retirement. Whether it is with family, starting a new business venture, working with a charity or continuing to do what you do now, doing the above will give you the flexibility to stay in control, make your own choices and maintain your lifestyle at age 60, 62, or beyond.