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Retirement Planning Gives the Confidence Needed to Retire, part 2

Last week we looked at the importance of planning for retirement financially and mentally. A Washington Post article, ‘Dying at your desk is not a retirement plan,’ noted that some people who save enough may keep working because they can’t imagine being fulfilled any other way. This is in contrast to those who absolutely must keep working because they don’t have enough retirement savings. People in both groups could (literally or figuratively) end up doing what the article says—dying at their desks.

So how does one avoid working until the very end? There are no guarantees but the article offers some clues as to how one can prepare well for retirement. 

Start to save early

The writer interviewed a man who started saving for retirement in his 20s. Everyone cannot do that but giving yourself time for your money to grow is ideal.  The man interviewed estimates that he saved 20-25% of what he earned.

“Gilbert is a case study on how to mentally and financially ready yourself to retire. He saved like mad, maximized tax-deferred retirement accounts and created a diversified portfolio of low-cost mutual funds. He lived well but prudently.”

This man also took the perspective that your spending decisions are also retirement decisions. Spending more means you will need to work longer.

Reduce work

The article’s final quote is from a man who cannot imagine with he would do as a retiree. This differs from the interviewee immediately before: a man who works a reduced schedule. This man lost money during the Great Recession and sold a property at a significant loss but is still not doing badly. Rather than working full-time or stopping work completely, this man still works but also finds time for recreation. He told the Post that his work fulfills him and he also works because he wants to save more so he has more to leave his family.

These balanced approaches to saving more (living well but prudently and working less while finding time for recreation) are possible. If you don’t start to save for retirement in your 20s, start as soon as you can. And if you find that you need or want to work well into your 70s, you can still find ways to relax.