Are you nearing what was once your ideal retirement age, but the numbers don’t add up? Working a few more years to boost your savings seems logical. But what if that plan isn’t as reliable as it looks? The reality is, relying on working longer is a bad retirement plan; it could be a risky gamble.
Health issues, job market changes, or simply the desire to save a little more for freedom can all throw a wrench in your retirement plans. Many have anxiety about how long money will last in retirement. It’s worth exploring why working longer might be a bad retirement plan and considering smarter ways to ensure your money lasts as long as you do.
Why Working Longer Before Retirement Isn’t Always the Answer
The idea of working longer before retirement might seem like a simple solution to financial worries. But why working longer is a bad retirement plan often comes down to factors beyond your control. You may even find that more than one of these issues can affect a household which affects how long you to work to retire.
Health Concerns
Health issues are one of the main reasons why working longer before retirement is a bad strategy. As you age, the likelihood of facing medical problems increases. You should take serious illnesses, injuries, or chronic conditions into consideration.
Overworking and pushing longer hours to meet retirement goals can actually force early retirement, even if plans were to work longer. It’s counterproductive. The physical demands of some jobs might become untenable as workers age, particularly if work requires manual labor.
Many people who want to save more for their retirement do so because they are under financial constraints. Adding a potential health crisis to the mix can worsen your scenario, put you in debt—or even worse.
Fluctuating Job Market
Another challenge for seniors is the job market. Everyone doesn’t have the luxury of staying employed as long as they want in a comfortable executive position. Companies may downsize, shift focus, or prefer younger workers. Older workers often face age discrimination which makes it harder to keep a job or find new employment.
During economic downturns, older workers are more likely to lose their jobs.
Seniors are also less likely to find new employment compared to younger counterparts. Finding a new job in later years can be tough, especially in a competitive market. This risk is particularly high for non-college-educated workers and those in physically demanding jobs. This also means older workers have less bargaining power, which may force them to accept positions with less pay and unfair working conditions that may even exacerbate health issues.
Access to a Retirement Plan
Another major issue is the need for more access to retirement plans. According to the Economic Policy Institute, "57% of older workers (ages 55–64) and 53% of prime-age workers (ages 25–54) participate in an employer-based retirement plan, and this share plunges to 25% for workers ages 65 and older."
Everyone doesn’t benefit from a robust employer-sponsored retirement plan like a 401k or pension. The risk is even higher among BIPOC workers, women and disabled persons.
Many jobs, especially in the gig economy or small businesses, don’t offer these benefits. Some companies are even pushing the burden of retirement savings onto employees themselves. Without consistent contributions to a retirement fund, relying on additional years of work to build savings may not be enough to secure a comfortable retirement.
Caregiving Responsibilities
Caregiving responsibilities often fall on women disproportionately, creating large hurdles in careers and retirement planning. This burden can force many women out of the workforce earlier than planned or compel them to take on part-time roles that don’t offer the same retirement benefits as full-time positions. These jobs rarely provide retirement benefits like 401k plans, leaving women with fewer resources to save for retirement.
According to the U.S. Department of Labor, women are more likely to become caregivers for aging spouses, parents, or other relatives, interrupting their career trajectories and impacting their financial stability.
When women leave the workforce to provide care, they lose their income and future earnings, retirement contributions, and career advancement opportunities. This gap can lead to reduced Social Security benefits, calculated based on lifetime earnings. Time spent out of the workforce can diminish the value of any employer-sponsored retirement plans or pensions they might have had.
For women providing care to someone other than their spouse, the situation can create additional pressures on the household. In these cases, the woman’s spouse may feel compelled to work longer hours or delay retirement to compensate for the lost income and the gap in retirement savings.
This added financial strain can lead to increased stress and health issues for both partners, as the spouse working longer may face the physical and emotional toll of extended work years. The caregiving partner might struggle with the demanding nature of unpaid care, often without the financial resources to support their own retirement. Working longer is a bad retirement plan because it’s not sustainable.
How Long Will Money Last in Retirement?
How long your retirement savings will last depends on a number of factors, such as:
- how much money you’ve saved
- your lifestyle goals
- inflation/cost of living
- unexpected expenses (e.g. medical bills, emergencies, etc.)
- investments and market fluctuations
- taxes
- life expectancy
You should work with a financial planner to help you determine how long your retirement money will last and what you can do to make sure you’re covered.
How Long Do I Have to Work to Retire Comfortably?
Figuring out how long you have to work to retire comfortably is a question that doesn’t have a one-size-fits-all answer. It depends on your lifestyle, savings, and financial goals. Some people can retire earlier because they’ve saved aggressively, while others might need to find an alternative.
How much do you spend each year? How much do you plan to spend in retirement? These numbers help determine how large your retirement fund needs to be. From there, you can decide how long your retirement money will last based on your savings, investments, and expected expenses.
Make Money Work for You
Instead of working more to retire, find a way to make your money work for you. With Asset Preservation Wealth and Tax, we can create a personalized retirement plan for you. We take a holistic approach—examining every aspect of your financial circumstances.
Talk to a trusted financial planner today!
Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
A Roth conversion may not be suitable for your situation. The primary goal in converting retirement assets into a Roth IRA is to reduce the future tax liability on the distributions you take in retirement, or on the distributions of your beneficiaries. The information provided is to help you determine whether or not a Roth IRA conversion may be appropriate for your particular circumstances. Please review your retirement savings, tax, and legacy planning strategies with your legal/tax advisor to be sure a Roth IRA conversion fits into your planning strategies.
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