What if you found out retirement was bad for you?
Would you reconsider it? Or at least the way it is traditionally done?
Richard W. Johnson thinks so. He’s the director of retirement policy at the Urban Institute. His survey of studies done on the health of retirees suggests a number of downsides for retirees, especially early retirees.
It probably isn’t one thing, rather a number of things that bring on the downsides of retirement. Too much time to overindulge in food and drink, no physical exercise, too little connection with friends, feelings of purposelessness, depression, just to name a few.
Lifespan. Boston College’s Center for Retirement Research estimates that delaying retirement reduces the five-year mortality risk for men in their early 60s by 32%. The impact of early retirement is less for women.
Mind. A 2014 study of 500,000 retired self-employed workers in France found those who had retired early had significantly higher rates of dementia than those who had retired later. Research shows the retirement significantly reduces cognitive function.
Social. You may not realize how important your work friends are until you no longer have them. Some retirees become socially isolated. One researcher noted that retirement actually shrinks social networks and the frequency of social interactions.
Johnson points out that volunteering may provide some or all of the benefits of work. It can reduce depression and isolation and increase life satisfaction.
Money. Obviously, if you stop working, that paycheck you earned while working stops. So, there is a very obvious way in which retirement harms you financially. Unless you’ve done an unusually good job of saving and preparing for retirement, you run the risk of chipping away at your nest egg, until such time as there are no more eggs in your nest.
It is the great fear of all retirees, and for good reason.
The Urban Institute has estimated that each year of additional work raises future annual retirement income by 9% on average.
Think about it – you are continuing to live on a paycheck, you are able to save a bit more each year towards retirement, your retirement accounts have another year to grow, and the length of time your money must last just got one year shorter.
In my work, I spend a lot of time analyzing the retirement prospects of married couples and individuals. It is not unusual for me to tell them, “You cannot retire…yet.”
Often, they take that as bad news.
After reading the research surveyed by Richard Johnson and his Urban Institute colleagues, I’m going to stop feeling bad about telling people they need to work a bit longer.
Maybe delaying retirement will also help them live a bit longer and enjoy life while they do.
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