Why Working Longer Won’t Always Work

By: Garrett Shinn, CPA

Do you plan on working past retirement age? If so, you are not alone. These days, many employees choose to work longer and retire later.

The reason for working longer is that most employers have switched from defined benefit pension plans to defined contribution plans, such as a 401(k). This switch transitions the choice of investment and associated risk to the employee. As a result, many employees plan to work longer in order to accumulate greater benefits.

However, simply planning to work longer is not a fool-proof strategy. According to a study by JP Morgan, 67% of Americans plan to work past 65, yet only 23% are actually able to do so. Why?

Age-related health problems are the biggest reason why employees are forced into early retirement. According to research conducted by the Center for Retirement Research at Boston College, both blue-collar and white-collar workers are susceptible to the respective physical and mental strains of their occupations. As a result, these workers must often retire earlier than planned. Early retirement can also force workers to claim their Social Security benefits early, which can significantly reduce their benefits and affect their retirement lifestyle.

Age-related health issues cannot be controlled. Therefore, when planning for retirement, be sure to take precautions with the factors that you can control. For example, by carefully considering the amount you will save and where you will invest your savings, you can mitigate some of the risk related to age-related health issues and an uncertain retirement age.

If you have any questions, please contact the Shinn & Co team at info@shinnandco.com or call 941.747.0500.