Shunning Retirement is a Terrible Plan

Planning to work indefinitely is not a realistic goal.

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Some people who haven’t saved enough are planning to never retire. This is understandable because many retirement accounts were devastated over the last few years and 401(k) portfolios have a long way to go before they recover.

[See The 10 Best Places to Retire in 2012.]

There are many compelling reasons not to retire. Financially, you will continue to generate income and live a more comfortable lifestyle if you keep working. Another big benefit to having a job is the health insurance. Health care is very expensive and is not affordable for many people without the help of an employer. It is also healthier to keep active and mentally engaged. A challenging job can stimulate your mind and help maintain your physical condition.

However, planning to never retire is a terrible idea. Here’s a look at why aiming to work indefinitely is unrealistic.

Health. It is unrealistic to believe that you can work until you die. As we get older, our health will deteriorate and we may not be able to continue working at the same pace or even at the same job. Many of us work in an office environment and there are many chronic problems associated with this type of sedentary job. Cubical jobs are often conducive to carpal tunnel syndrome, heart disease, stress, weight gain, and repetitive strain injuries. Many people develop health issues as they age and may not be able to continue working forever.

[See 11 Retirement Benefit Changes Coming in 2012.]

Finances. Planning to never retire can give someone a false sense of bravado. If you are not planning to retire, then you don’t need to save for retirement, even if you have extra money. You can spend all your income on a luxury car, a big house, and the latest gadget. Planning to work indefinitely is an excuse to not save money. But this can backfire if your are forced out of your job by a layoff or business closure and you are unable to find another one.

Choice. If you save for retirement, you will eventually have the option to retire and to take up other challenges. You can pursue something that brings you joy instead of going to work every day. If you plan to not retire and do not have any savings, then you have no choices if something goes wrong with your current position. Health, age discrimination, and obsolete skills will push you out of your job at some point. At that time it may be difficult to find a good job that pays well. Wouldn’t you rather have the option to retire in case you eventually end up being unable or don’t want to continue to work?

[See Tips for Baby Boomers Reaching Retirement Age in 2012.]

Planning to never retire may initially sound like a good idea because then you can spend all your earnings rather than save. But this is a bad plan in the long run. Most people cannot work until they drop.

Joe Udo is planning an exit strategy from his corporate job by reducing expenses and increasing passive income. He blogs about his journey to early retirement at Retire by 40.