4 Outdated Retirement Planning Rules To Ditch, According to a Personal Finance Expert
Written by
Jamela Adam
Edited by
Jenna Klaverweiden
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Most retirement planning advice seems to follow a similar formula: start saving as early as you can, leave the workforce at 65, and spend the rest of your retirement days playing golf or vacationing in the Bahamas. But personal finance journalist and author Chris Farrell believes this formula is outdated and that we should rethink what retirement looks like.
In a recent interview on “Your Retirement Planning Simplified,” Farrell, the author of “Purpose and a Paycheck: Finding Meaning, Money, and Happiness in the Second Half of Life,” shared several retirement planning rules that no longer make sense.
Here are the outdated retirement beliefs he believes can be left behind.
Also see 35 retirement planning mistakes you’re wasting money on.
Retirement Means Quitting Cold Turkey
“If you mention retirement, it’s immediately assumed that means not working,” Farrell said. But for many people, retirement is actually more of a transition to a different type of work.
More and more older adults are pursuing part-time work, consulting or even launching businesses, even though they’ve technically retired. Farrell mentioned in the interview that about a quarter of all new businesses in recent years have been started by people ages 55 to 64. Additionally, according to T. Rowe Price, 57% of retirees want to continue working in some way.
Farrell himself (now 71) is still writing and working, which makes him the perfect example of how retirement can look different from how it used to.
Your Career Ends at 65
According to Farrell, the idea that productivity and innovation peak in your 30s or 40s is not true, explaining that older adults can be creative too. He believes that with decades of experience, people who are nearing retirement age or have already retired can often bring fresh perspective to companies, especially in knowledge-based industries.
Technology has also lowered the barriers to starting a business or working remotely. You don’t need to commute or maintain a 9-to-5 schedule to stay active and earn income. In other words, even if you experience mobility issues in your golden years, you can still make money online or without having to stick to a rigid work schedule.
You’re Doomed If You Don’t Have Enough Savings To Retire
Of course, saving for retirement is important. But Farrell points out that many Americans simply haven’t had the opportunity or resources to build large nest eggs through no fault of their own. Life is expensive and can throw curveballs that completely derail your financial plans.
In fact, according to a recent SoFi survey of 500 adults aged 18 or over, only 7% have more than $500,000 saved for retirement, while most respondents reported planning to retire after 60.
So for many Americans, it makes sense to continue working after retirement, even if it’s just on a part-time basis. If you’re in this situation, Farrell said delaying your Social Security, if possible can also make an “enormous difference” in your benefits.
Employers Don’t Want Older Workers
Unfortunately, age discrimination still exists in the workplace, but Farrell believes it’s not as prevalent anymore. He said that with labor markets tightening, many companies are now starting to realize the value of experience. Many are hiring retirees back as consultants or part-time contributors and giving them flexible hours and remote work options.
Some organizations are even building alumni networks to stay connected with former employees who may want to return in a different capacity.
Rethink Your Retirement
Farrell’s main message in this interview is that you don’t have to follow outdated retirement planning rules that don’t work for you. If you want to start a business or continue working part time at a coffee shop after 65, do it. Follow your own path.
He also encouraged anyone nearing retirement to ask deeper questions about what gives them purpose, who they want their community to be when they’re not seeing co-workers every day and more.
Talk to your network, test ideas and remember that your retirement doesn’t have to look like everyone else’s.
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