The Financial Impact of Working Longer

By Andrew Rosen via

The last thing any working professional wants to think about is working longer. However, working longer is an important lever (or option) to pull when it comes to your retirement lifestyle. It potentially allows a “richer” retirement and can give “more” to your lifestyle during your working years. In my experience of the 4 levers of financial planning, this is the one most are willing to do (and also the simplest).

Pre-retirement benefits.

It’s been said to maintain one’s lifestyle in retirement, you should be saving 20% of your take home pay. I am a big fan of saving; however, the reality is a dollar can only be sliced in so many ways. I’ll use my own life as an example. Besides the necessities (mortgage, food, etc.), I have my children’s swim, dance, gymnastic, art, and music lessons. Then there’s vacations and date night (which is very important, too). Also, there are other necessities my wife tells me about – like getting hair and nails done!

My point is, by the end of the month it can be a stretch for many of us to conjure up the required 20%. Now, I am not suggesting to skirt your responsibilities of saving, however, many of us choose to live in the now over planning for the future. I get it. My father died young and it made me understand the fragility of life. Many working professionals simply can’t afford to save more due to the demands of raising a family.

So, how can working longer help? It seems intuitive, but working longer provides that back end security. If we made a bad decision, got a late start, or just chose to live more for today, the reality is we can choose to work a few more years to make up for lost ground.

Let me be clear though — working longer shouldn’t be your only financial planning resource! Putting all your eggs in that basket can be scary and very risky. There are many things you can’t control. What if you or someone you love gets very sick?  What if your kids need help?  What if your employer no longer deems you relevant, hiring a newer and cheaper model?

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