Why Retiring at 65 Could Be a Terrible Idea (For the Wealthy)
Sometimes, financial independence just isn't enough.
Most folks who've built up a high net worth know, deep down, that they don't need to wait until they're 65 to retire. But they keep working anyway, because having money doesn't necessarily make you worry about money any less. And besides, you're "supposed" to wait until you're at least 65 to retire. Right?
Think about it this way: you don't keep playing the game after you've already won!
And if you have enough money to fulfill your sense of purpose and secure your needs for the rest of your life, then however old you are, you've won.
Here's why the affluent should consider rethinking their retirement timelines.
1. The "rules" don't apply to you.
Working until at least age 65 is a necessity for many seniors, even people who do have a decent nest egg built up.
Some might need to hit certain ages to trigger pensions or other benefit bonuses. Others might want to keep their insurance as long as possible because of specific healthcare concerns. Delaying Social Security to maximize benefits might factor in. Some families have special needs, or a pack of grandkids heading off to college at the same time.
If your wealth can already solve these kinds of problems, while also giving you the means to relocate, see the world, and spend every day on your favorite golf course -- all without jeopardizing your long-term needs in retirement -- then work is no longer a necessity. It's optional.
So, why are you still working?
Maybe because you've done the back-of-the-napkin math. You've read the social media posts. You've heard the chatter from your friends and family:
- You need to be able to withdraw 4% every year.
- Paying for health care until 65 can be expensive.
- If you like your job, you should die with your boots on.
- You're earning so much money, why not pad your nest egg another year or two?
- If you retire too early, you're going to be bored.
- You and your spouse are going to drive each other crazy.
Sure, there's a kernel of truth in all these ideas. But nothing that the combination of your assets, forethought, personal reflection, open communication with your spouse, and comprehensive financial planning can't solve.
2. You're overlooking the real costs of delaying retirement.
Money is not your most valuable asset, especially once work has become optional. After all, if you decide you need more money, you can go back to work, take a part-time job, or adjust your investment strategies. Some affluent seniors might have more money in the later years of retirement than they've ever had at any other point in their lives just by allowing their assets to keep working for them!
But you'll never have more:
Health: One retirement rule that applies to everyone is that you're going to slow down as you age, and you're going to shift more of your spending towards healthcare. The younger you are when you start tackling your bucket list, the more energy you'll have to truly enjoy yourself. Leaving work early can also allow you to focus more of your resources on things that will boost your longevity, like eating better and adding more exercise to your daily routine.
Time: Financial affluence is a tool to achieve an even greater resource: time affluence. The freedom to control your own schedule, pursue what truly matters to you, and spend the maximum amount of time with the people you love is the highest level of wealth. Time is also the resource that can slip away the easiest if you're not intentional about spending it wisely.
3. You're focused on your career instead of a calling.
What more do you have to accomplish professionally? Is another promotion, another paycheck, another all-consuming project really the best use of your nonrenewable resources?
If the "endless vacation" mode of retirement sounds unrewarding, you're not alone. Plenty of weekend golfers discover that spending every morning on the course isn't as fulfilling as they thought it would be. Spouses who are used to having their own routines often get antsy if they're puttering around the house together all day.
Separating your sense of purpose from your career can be challenging. But retirement offers plenty of opportunities for you to reinvest your purpose in a calling that can enrich both your life and your legacy, such as:
- Consulting or Board Service: Take in the 30,000-foot view of your former company or profession and work part time on high-level strategy.
- Teaching, Mentoring, and Volunteering: Share your wisdom with the next generation of professionals in your field. Or donate your time and skills to a cause that’s important to you.
- Philanthropy: Start your own charitable foundation or family trust that adds sustainable giving to your legacy plan.
- Entrepreneurship: Turn that business idea you’ve been mulling for decades into a new company – and hire yourself as CEO.
- Loved Ones: Wife, mother, grandmother. Husband, father, grandfather. Friend. Confidant. Workout buddy. Shoulder to cry on. These are some of the most challenging, important, and fulfilling callings in life. Use your resources to invest as much as you can.
Practical Steps to Retire Before 65
At Keen Wealth Advisors, our goal for every person we work with is confidence. Some of the items we’ll work through on our Early Retirement Checklist include:
- The “Have I Already Won?” Test: Tear up that "napkin" and run your numbers through complex computer simulations that test your financial plan's probability of success in a wide variety of market and life scenarios.
- A Phased Exit Strategy: Typically, we recommend folks build at least a three-year runway to retirement. Your assets might allow you to accelerate that timeline financially. Emotionally, you might need some extra time to adjust via scaling back your work hours, taking a sabbatical, or handing over some of your day-to-day responsibilities to potential successors.
- Your Blueprint for Purpose: In my book, Keen on Retirement: Engineering The Second Half Of Your Life, I encourage all soon-to-be retirees to be intentional about planning their time. You can start by grabbing a blank calendar, dividing every day into thirds, and seeing how many Mornings, Days, and Nights you can fill with engaging activities. Don't forget to set aside some personal time for exercise, learning, and reflection.
If you’re wealthy, retiring at 65 isn’t just unnecessary — it could be a waste of your best years and your most valuable resources.
Whatever reservations you may have about early retirement, you’ve won the game.
Let Keen Wealth help you claim your prize.
About Bill
Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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