(This article by Michelle Singletary originally appeared in The Washington Post on Aug. 5, 2018).
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The “in thing” now for retirement is to do it early.
There are communities, blogs and early-retirement crusaders whose mission is to sing the praises of a work-free lifestyle.
Actually, to tell the truth, many early-retirement enthusiasts are earning quite a bit of money through blogs and podcasts describing how they quit working in their 30s, 40s and early 50s. So technically they aren’t really retired, but that’s another matter.
Still, hearing their stories might make you feel bad that you can’t join their bandwagon. I'll be honest. I get jealous. I’m still slogging away in a wage job trying to save as much as I can for the day that I can call it quits. My plan in retirement is to spend most of my time either traveling or volunteering.
But what if you want to work until your 70s, 80s or even 90s? What if your health is such that you can continue full employment?
That’s the question put to me by Mark Kantrowitz, an expert on student financial aid. I frequently interview Kantrowitz when writing about families trying to pay for college.
[Should parents pay off $200,000 in law school loans for a son who ended up in rehab?]
“I liked your recent column on retirement savings and paying down student loans, especially the advice to keep an emergency fund, maximize the employer match, then use the rest to pay down debt,” Kantrowitz emailed me. “While reading the column, it struck me that we never see advice for people who intend to work forever, health permitting. I love what I do, and my work helps people, so why would I ever stop?”
[You have $100,000 in student loans. Should you save for retirement or pay off debt?]
Kantrowitz asked: “Are there any other considerations for people who keep working? Are there any strategies they should pursue?”
Actually, there is a lot of research on why continuing to work throughout your senior years can be beneficial. There are at least three good reasons not to retire.
Not retiring can be emotionally, physically and financially good for you.
Studies show working gives people purpose.
Read more: Working Longer May Benefit Your Health
And by working longer, you can save more.
“Those saving for retirement would be better off working longer than just bumping up their savings rate by one percentage point, according to the authors of the new paper, ‘The Power of Working Longer,’” reported Robert Powell for The Street.
Researchers found “delaying retirement by three to six months has the same impact on the retirement standard of living as saving an additional one percentage point of labor earnings for 30 years.”
Research has also found people who work longer tend to be healthier.
Personal finance expert Jean Chatzky did a series for NBC’s “Today Show” on the benefits of not retiring. She profiles an 81-year-old dentist who was still working.
Read more: Retirement doesn’t have to be the end: How working longer benefits you
“Researchers at Oregon State University analyzed data from a large, ongoing study of people age 50 and up,” Chatzky reported. “What they found was that people who continued to work past 65 had an 11 percent lower chance of death from all causes.”
Read more: Never Retire: Why People Are Still Working in Their 70s and 80s
As for strategies read: Retire early or keep on working? How to prepare for either choice.
Here’s the thing. Don’t feel pressure to retire if you can and want to continue working. The grass over in early retirement might not be as green as you think.
Your thoughts
Are you still working past the so-called retirement age? How’s that working for you? Send your comments to colorofmoney@washpost.com. Please include your name, city and state. Put “Not retired” in the subject line.
Retirement rants and raves
I’m interested in your experiences or concerns about retirement or aging. What do you like about retirement? What came as a surprise?
If you haven’t retired yet, what concerns you financially?
You can rant or rave. This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”
In last week’s newsletter I wrote about a young couple with $100,000 in student loans. The wife wanted to know if she should reduce retirement savings to help pay down the debt.
It was a “WWMD” question, or “What would Michelle do?”
“Should I be putting more toward retirement?” the wife asked. “I always worry we’re not putting enough away for retirement but at the same time, we only have so much money and a lot of things going on that require that money.”
I suggested that they pay off the debt first. They’re still young enough that they can do some retirement catch-up later.
For more background read: You have $100,000 in student loans. Should you save for retirement or pay off debt?
I asked readers to jump in with their advice.
M.D. from the District weighed in. She’s 33 and getting married. She wrote, “I am paying off debt (student loans, car, etc.) and saving for wedding expenses. I reduced retirement savings from 9 percent to 5 percent to pay off debt and save for the wedding. Staying at 5 percent allows me to maintain full employer retirement matching. I spend approximately 30 percent of my income on housing. The couple needs to focus on paying down debt. Quickly. With $30,000 in savings, [the couple in the column] should seriously considering putting at least $25,000 (or more) toward debt and attack it vigorously. Delay home improvements on the recent purchase and put that money toward debt. Save money to cash flow future projects.”
George Simpson of Tampa wrote, “My son has a modest student loan that was used to help pay for graduate school. He decided not to pay it off because it was helpful in getting his credit score above 800. Without the credit history of prompt payments then getting a reasonable mortgage rate would be hard. I agree that young people should pay down their student loans by adding extra principal amounts each month. If they get a nice bonus, place a big chunk toward the student loans. When the pain is bearable then let the loan ride long enough to not impact your FICO score.”
[How I got a perfect 850 credit score]
Lisa from Manassas, Va., wrote, “We did take a break from putting money away for retirement while we paid off debt and I would recommend that this young couple start listening to Dave Ramsey and maybe even call into his show. He will tell them things they don’t want to hear now but will be grateful for later if they listen and follow his steps. They are concentrating on doing too many things at once right now. This strategy is not working. Right now they need to focus — like a laser — on getting out of debt.”
Sid Kaskey from South Miami, wrote, “What can a young person do that an older person cannot? Use time and compounding to their advantage. The absolutely number one priority should be putting a significant amount aside for retirement. Waiting cost money. I would have recommended while they are young live like poor students for a few years, save as much as they can in a tax [advantaged] accounts and pay off as much as they can of their student loans. The house can wait.”
Sara Ann Briggs from Hamilton, Mont., is a housing counselor for first-time home buyers. I’ll let her have the last word for now on the decision to buy a home with $100,000 in student loans.
“I counsel people all the time, pay down your debt,” she wrote. “Student loans are by far the biggest challenge for people trying to purchase their first home. A close second is their credit card debt.”