“But I never want to retire!”
I occasionally hear people protest the idea that they should be saving for retirement. They’ll object that they don’t plan to retire. They love their job, they say. They enjoy working. They like the notion of maintaining an active lifestyle and furthering their careers, even into their 70s.
CEOs and politicians often work into their 70s and beyond, they’ll point out. Why couldn’t they?
It’s fantastic that they enjoy working so much, but that’s absolutely irrelevant to the discussion about retirement. Here’s why.
You Could Be Forced to Retire
Retirement doesn’t always happen by choice. Sometimes, people are forced into an early retirement as a result of:
Recession -- A slumping economy can force employers to lay off even the best workers. Many employers don’t want to lay off great workers, but declining revenue forces them to make that tough call.
Industry Decline -- Technological change can make some industries and careers obsolete. Many people in the newspaper industry, for example, felt the pinch after the popularization of the Internet. When classified ads transitioned from print publications to Craigslist and other websites, newspaper revenue dried up -- taking plenty of jobs along with it.
Age Discrimination -- Many older workers have complained about job discrimination as a result of their age. Like it or not, some discriminatory employers unfairly view older workers as less-technologically-advanced than their 20-something counterparts. This can make finding a new job difficult, especially if discrimination is combined with industry decline or a recession.
Health Issues -- Some retirees would love to work, if only their health would allow them to do so. Unfortunately, with age comes the increased risk of deteriorating health, which can impact your ability to work.
Family Care -- Other people are forced into an early retirement because a spouse, sibling, parent or child is in need of long-term care. Paying for an at-home nurse could cost more than your annual salary, so it makes the most financial sense to retire from work so you can care for your family yourself. Unfortunately, though, this option will only be available to you if you’ve planned for your own retirement.
Let’s assume the best: none of these scenarios happen when you’re in your sixties. The economy is strong. Your industry is growing. You’re recognized for your job skills and talent. Your health, and your family’s health, is in fantastic condition.
At this point in your life, though, you might be hungry to take some career risks. Perhaps you want to start a business. Perhaps you want to run for office, write a book or otherwise point your career into a different direction. Or perhaps you just want to cut back on your working hours so you can spend more time with your grandkids.
Guess what will help you have the financial freedom to be able to take those risks? A healthy retirement fund.
In fact, you might even say that “retirement” is a misnomer: it’s really a tax-advantaged savings/investment fund that you can’t tap until you’re 60.
The fund isn’t for “retirement,” per se. It’s a fund that lets you legally avoid or defer taxes on your investments, in exchange for your promise that you won’t spend the money until you turn 60. (You can begin to make penalty-free withdrawals from a traditional IRA when you’re 59-and-a-half.)
But what you choose to do with that money when you turn 60 is completely up to you.
Plenty of “older” people have launched successful enterprises. Harland Sanders, the founder of KFC, was 65 when he began franchising his business. Ray Kroc, the founder of McDonalds, was 52 when he teamed up with the McDonald brothers, his business partners.
The bottom line: having money allows you to take career risks you otherwise wouldn’t be able to take. And when you’re in your 60s, with 40 years of experience and connections already built, you might want to capitalize on opportunities. A strong retirement fund will allow you to do that.
Read more: Why Retirement Should Be Your First Priority