When I write about retirement planning or saving for retirement in general, one reply I often hear is, “But I don’t want to retire! I enjoy my work.” That’s a sentiment I can relate to personally. I enjoy my work a great deal, and I hope to continue doing it for as long as I can.
So, for those of you in a similar situation, what should you be doing differently from other investors?
Should You Save for Retirement Anyway?
You may enjoy your work now, but will you still feel that way when you actually reach the age where most people retire? Betting your future livelihood on the assumption that you won’t change your mind is a risk that doesn’t seem wise to me.
Naturally, the level of this risk is affected by your current age. If you’re 62 and have no desire to retire, that’s one thing. Being 32 and having no desire to retire is another. The likelihood of changing your mind at some point in the next three decades is much greater than the likelihood of changing your mind in the next three years.
In fact, if you’re in your twenties or thirties, I’d suggest saving as if you planned to retire at a typical age, regardless of whether you currently intend to do so.
Once you begin to close in on 65 or so, if you still feel no desire to retire, then at that point, it likely makes sense to start scaling back your annual retirement savings. (Or, depending on how much you’ve accumulated by that point, it could make sense to stop saving completely.)
How Long Will You Be Able to Work?
Even if you never end up wanting to retire, it’s important to recognize that you might not get a say in the matter. Layoffs occur, even to valuable employees. And in an era where age discrimination is an (unfortunate) reality, finding another job isn’t a sure bet.
Alternatively, even if your employment prospects never pose a problem, your health might. Depending on the work you do, there’s a good chance that at some point your body simply won’t allow you to continue the same level of productive output.
To neglect saving because you assume you’ll be able to work as long as you want puts you at risk of a meaningful decline in living standard later in life.
Roth IRA or Traditional IRA?
As we’ve discussed before, the question of whether to contribute to a Roth or traditional IRA is primarily a function of how you expect your tax bracket during the withdrawal stage to compare to your current tax bracket. (If you expect it to be higher later, go with a Roth. If you expect it to be lower, go with a traditional IRA.)
Naturally, if you expect to continue earning income well into what many would consider their retirement years, your late-in-life tax bracket is likely to be higher than that of many other investors. As such, a Roth IRA becomes relatively more attractive.
Don’t Forget About Insurance.
Lastly, if you work well into your 70s, you’re going to have different insurance needs than investors who retire at age 60 or 65. If you’re planning to continue working (and you expect to be reliant on that income), you’ll probably want to keep a disability insurance policy active. And, if anybody other than you will be relying on your extended-career income, you may also need life insurance longer than most other investors.