How To Prepare for Retirement When You Don’t Actually Want To Retire
Written by
John Csiszar
Edited by
Kristen Mae
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If you’re in your 60s and still working, it’s inevitable that at some point someone will ask you when you plan to retire, or perhaps even why you haven’t already. But if you’re still building wealth and genuinely enjoying your work, there’s absolutely no reason why you “have to” retire.
In fact, continuing to work can provide numerous benefits, such as growing your nest egg, providing personal fulfillment and boosting your future Social Security payout.
Still, that doesn’t mean you should ignore retirement planning altogether. At some point, you may not want — or be able — to work. Here are some smart ways to prepare for retirement, even when you don’t actually want to retire.
Keep Working, but Start Drafting a Plan
You’ll be well ahead of the game if you start drafting your retirement strategy while you’re still employed. Far too many people wait until after they’ve stopped working, when it’s often too late to make meaningful adjustments to ensure a fulfilling retirement.
Start by creating a realistic retirement budget. Use the budget you’re currently living on as a baseline, and adjust for expenses likely to change post-retirement. While every situation is unique, you might expect transportation, wardrobe and commuting costs to decrease, while medical expenses and travel could increase.
Once you project out a rough estimate for how much you’ll be spending in retirement, reverse-engineer the process to determine how much income you’ll need to support your lifestyle. For example, if you think you can live on $60,000 per year and expect a 4% return on your investments, you’d need a nest egg of about $1.5 million to sustain that indefinitely. If you plan to draw down your savings to zero after 30 years, you’ll need just over $1 million.
Keep in mind, though, these are just broad strokes. Variability of returns, inflation, healthcare needs and taxes will all affect your actual numbers. Planning for this variability is part of the process as well.
Figure Out How To Maintain or Acquire Proper Insurance
One of the best reasons to keep working in your 60s, especially if you’ve already built a sufficient retirement nest egg, is to keep your employer-sponsored health insurance. After age 65, you’ll likely qualify for Medicare, but that doesn’t always mean you’re fully covered. Long-term care, dental, vision and other supplemental needs can add up quickly.
While you’re still working and covered, take time to see what insurance may remain in effect after you retire, or where your coverage may come up short — or vanish completely. In many cases, buying a long-term care policy or supplemental insurance while you’re younger and healthier is more affordable than waiting. Knowing your options early gives you more time to act and more control over future costs.
Create a Flexible Retirement Plan
If you’re working for a company, especially a larger one, you probably have access to a company-sponsored retirement plan like a 401(k). If you’re an entrepreneur, you may have a retirement plan for self-employed individuals, such as a SEP-IRA or solo 401(k). But no matter your employment status, it’s also worth looking into an individual retirement account, like a traditional or Roth IRA.
These types of plans typically have less restrictive rules and may even offer more flexibility in terms of investments. Most advisors recommend diversifying across both pre-tax plans, like traditional IRAs and 401(k) plans, and after-tax plans, like Roth IRAs. This blend gives you more tools for tax planning once you start taking withdrawals in retirement.
The Bottom Line
If you work a job that you truly love, there’s no rule that says you have to retire at 65 — or at all. Working into your 60s, 70s or beyond can provide meaning, structure and financial benefits. But even if you don’t really want to retire, it’s still a good idea to plan as if you will someday. At some point, you may want to slow down — or life may force you to. Whatever the reason, if you have a plan in place ahead of time, you’ll be in a far better position to retire on your terms.
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