70 is the new retirement age–not a month or year earlier. You likely have plenty saved up to breeze through 15 years or so of retirement. But, people, if you stop working on your 60s, your retirement stash may have to support you for 30 years, not 15.
I want to be very clear: I’m not talking about a small outlier subset of people who stand to live an unusually long life. Healthy individuals in their 60s today have about a 50 percent chance of living into their 90s. Can you honestly tell me you’re 100% sure you will not run out of cash if you begin spending your retirement down funds in your 60s and end up living into your 90s?
I speak from experience. My mother lived to age 97. I hate to think about what her life would have been like if I wasn’t able to make certain that her financial needs were cared for. I’m grateful I had the resources to provide this care. My question for you: Do you think your children would be able to easily step in to help you if you ran out of cash?
And then there is the cost of health care. You do realize that Medicare covers only about 70% of medical care costs? Between Medicare premiums, supplemental policy, drug coverage, and out-of-pocket expenses that the normal retiree is on the hook for about 30% of health care costs.
And given the chaos in Washington, we don’t know what our share of retirement health care costs are going to be in the future. (Yes, I said “we.” I’m 66 and enrolled in Medicare.)
The main point is that working longer is the key to a secure retirement. Every dollar you do not spend in your 60s is a dollar that could keep growing for your 70s and beyond.
So I need each and every one of you to start working until 70 (or later). For some of you, full-time work is going to be the best insurance to making sure your money outlasts you. But for many of you who have done a excellent job preparation, part-time work may be all that you require.
Okay, so how do you reset your retirement to age 70?
Step 1: Delay Tapping Social Security Until 70
When people tell me they plan to retire in their early 60s, part of their plan is to start taking their Social Security retirement benefit at 62, the earliest promising era. People, please hear me: That is among the biggest mistakes you will ever make!
Wait till 70 and your annual benefit will be 76% higher than that which you’re eligible for at 62. That higher payment can be a huge help in helping you through a lifetime.
My advice: If you are married, the higher earner must, must, must delay Social Security before 70. If the other spouse wants to start sooner–I seriously hope not before age 67–I will allow it. (That said, if you’ve got a medical condition that keeps you from working, or increases the likelihood that you won’t live into your late 80s or even 90s, then claiming earlier may make sense.)
All of you should absolutely know how much Social Security you are projected to get. I would like you to go to the Social Security website, where you can find a personalized estimate of your potential advantages.
Step 2: Establish the Foundation Now to Work Longer Later
I’m unsure about peppering my buddies with questions regarding their retirement. And they always give me the same answer: “Don’t worry. I’m never going to stop living.” And these are people with office tasks, not entrepreneurs.
I worry. A lot! Working till you die is nuts, as well as working into your 70s is a risky bet. Have a look around your workplace: How many 70-year-olds do you see at your business?
Even if you’re self-employed and are not worried about anyone laying you off because you are the boss, life can still get in the way. About 30% of people surveyed by the Transamerica Center for Retirement Studies reported that they retired earlier than expected because of health difficulties.
I realize you may be getting annoyed with me right about now. I just told you to keep working until 70, and today I’m commiserating with you that it can be very hard to pull off that. Difficult–but not impossible.
This is not something you can simply flip the switch on when you hit 60. The financial and employment planets don’t magically align to give you just what you want and need. It’s gonna take some work to have the ability to keep working on your own terms.
Start a dialogue with your company–the right way. If you love your current employer (and they, you), it surely makes sense to start talking at least two years or so out about what a reduced job might look like.
Do not just tell your supervisor and HR you want to work part-time. That makes a headache for them. Present them with a vision of what functions you can fill and what problems you can fix as you downshift.
Stop the coasting. Right here. Right now. Doing just enough to get by places a well-deserved target in your employment file. If you’re lucky enough to have a job that offers ongoing training opportunities, or continuing ed, you’re insane not to squeeze out maximum value.
With the explosion of online education, you can Polish existing skills or pick up valuable new ones from the comfort of your home computer. Does free fit your budget? Take a look at EdX, a consortium of schools that provide free courses, as well as “MicroMasters” apps for a fraction of the expense of a full-blown on-site master. Your regional community college can also be an economical way to pick up new skills.
Step 3: Truly Enjoy a Secure Retirement
I bet loads of you discovered all this depressing. Cursing me a little? No offense taken. I know this is a lot to digest. But here’s what I need you to understand: If you are fuming now, you have got it all wrong.
Having a clear-eyed vision of how broadcasting your 60s can set you up for a worry-free retirement should make you feel empowered. It’s the difference between holding your breath that everything will workout. Okay, and taking the steps today so you can confidently breathe easy knowing you have a plan that will work out just great.