Here’s a very sobering piece from financial planner Alec
Riddle, who looks at the relationship between how long you work and how
long you’re likely to enjoy your retirement. Citing some interesting
research, Alec argues that those who continue to work right up to the
maximum retirement age tend to have shorter retirements than their peers
who retire younger. This article will certainly make you think about
your own retirement plans and strategy, especially if you’re like me and
hoping to work until you’re 95. For regular insightful information from
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By Alec Riddle*
Imagine working as long as you possibly can,
or until your maximum retirement age, to ensure you have sufficient
funds for your Retirement, only to die within two years of retiring?
An actuarial study conducted on some of the
larger US Pension Funds including Boeing Aerospace, indicates that
employees who retired at the age of 65, died within two years of
retirement.
Dr Ephrem (Siao Chung) Cheng provided the
results from an Actuarial Study on the correlation between Retirement
Age and Longevity.
“Ten working years could cost you twenty years of your Retirement!”
The studies were based on the number of
Pension Fund cheques sent to Boeing retirees. The Boeing experience was
that employees retiring at age 65 received pension cheques for 18
months, on average, prior to death. A similar experience was discovered
at Lockheed Martin, where on average, employees received pension cheques
for just 17 months.
Apparently the experiences at Ford Motor
Company and Bell Labs were similar to those of Boeing and Lockheed.
Statistics at a pre-retirement seminar illustrated that the average age
of retirement at most large corporations in the US was 57. So people
retiring at age 65 are a minority, but it is still a startling
statistic.
The thought is that the hard working late
retirees (65) are more than likely putting too much stress on their
ageing bodies and minds and due to the stress, they develop a variety of
health problems. The associated stress induced health problems lead to
them dying within two years of retirement.
Another startling statistic from the same
Corporations is that those who retire earlier, say age 55, tend to enjoy
their retirement on average for more than 25 years. The chances are
that those able to retire earlier have less stress, have planned and
managed their lives better, with respect to finances, health and career
and are able to retire comfortably.
One important observation is that these
younger retirees (55) aren’t necessarily idle in retirement, but they
are far less stressed than their working counterparts from age 55 to 65.
This means they may be busying themselves with part time work, hobbies
and things they enjoy doing, so much so that ‘work’ becomes fun and is
done at a more leisurely pace.
Conclusion
People should plan their careers and their
finances, enabling them to retire, or at the very least be financially
independent, as early as possible. This will ensure they are able to
enjoy a longer, happier and more leisurely retirement to age 80 and
beyond.
Don’t switch off and be idle when you retire.
You can still do things that are of interest to you, or you can get
involved in things that are of value to your community, all at a pace
you feel comfortable with.
The flipside of the coin is that you may have
to keep on working very hard and under stress, till age 65, before you
retire. In that case and if the actuarial studies of some of the world’s
largest Corporations hold true, then the chances are that you would
probably die within a few years of retirement.
In a nutshell, by putting in 10 more ‘hard’
years, after the age of 55, you could potentially forfeit 20 years of
your Retirement. Or saying it differently, for every year you work
beyond the age of 55, on average one forfeits two years of life span.
- Alec Riddle was recognised by the industry as an authority
on Financial Planning, when he was crowned the FPI/Personal Finance
Financial Planner of the year for 2009/10, after being named a finalist
in 2008. Has a BA degree, majoring in Mathematics, from the University
of Port Elizabeth, successfully completing his Post Graduate Diploma in
Financial Planning in 2005 through the University of Free State and
became a Certified Financial Planner. In addition to being awarded SA
colours in 3 sporting disciplines, he also coached numerous national
champions and Olympians and qualified for the World Iron Man Champs in
2011/12 and was World Champion in his age category in 2011. Read more of Alec’s writing by clicking here.
