The case against retirement

It's also about the rosy assumption that your investments will appreciate every year. It is innapropriate to use the long term average apprciation of your asset mix in such a short term projection.

Yes, 4 percent is usually the number derived from the Monte Carlo simulations (adding an adjustment for inflation). The problem, as you most aptly put it, is whether or not the job will still be there. I see few (well, okay, none) people past early 50s in my current field (not just in the company, but in the field), which makes me doubt that working longer is an option. Instead, I am looking up at the mid-50s as the opportunity to give up the pressures of earning a six-figure income and do something completely different (and perhaps part time).

The trick is to have saved enough by that time so that it's feasible to do so. Defined benefit pensions? I keep hearing that urban legend, but have never actually met anyone who has seen it.

Barbara,

The result of Monte Carlo is a probability distribution, not a single number like the figure above... as in you will have X more if you work 2 more years and save 25%.

My only point is that there is much more uncertainty here than is implied. The only conclusion is that if you save more and work longer, you are likely to have more at the end... We shouldn't need a financial planner to figure that out.

Actually, the real conclusion is that if you save more, T. Rowe Price will have more AUM and will be able to afford to do more simulations!

If you work until you are 67 and then die when you are 67 1/2 you reap... NOTHING.

Curmudgeon wrote:

The problem, as you most aptly put it, is whether or not the job will still be there. I see few (well, okay, none) people past early 50s in my current field (not just in the company, but in the field), which makes me doubt that working longer is an option.

That may change. I work in the computer field. In the late 1980s a lot of my middle-aged colleagues were being laid off and having a heck of a time finding something else. When I had to go job-hunting a couple of years ago at 52 I was afraid the same thing would happen to me. Instead, I had a job almost immediately. There's probably still a prejudice against older workers in my field, but unless you're Google you can't get away with it. Fewer young people are majoring in computer science in college since the tech bubble collapsed.

Instead, I am looking up at the mid-50s as the opportunity to give up the pressures of earning a six-figure income and do something completely different (and perhaps part time).

I would have loved that, but unfortunately it didn't work out that way. And part of the problem with thinking that way is that the 50s are your peak earning years. It's hard to walk away from that if you don't have to.

The trick is to have saved enough by that time so that it's feasible to do so. Defined benefit pensions? I keep hearing that urban legend, but have never actually met anyone who has seen it.

I actually have one, but it's only a few hundred a month starting at age 65. Most people in my field changed jobs every couple of years. I hung in there at one with a defined-benefit retirement long enough to get vested. On the other hand, I didn't have a 401k available to me until I was mid-30s and wasn't savvy about investing so I didn't do as much as I should have with it. I got into the Magellan fund at exactly the wrong time and didn't have the sense to get out. Then there's the tech bubble, which pretty much cut my retirement fund in half when it burst.

Not that I'm complaining. Average person my age with a retirement fund only has $55,000 in it and I'm doing much better than that. But considering typical family lifespan I figure I probably should work until 70 if I possibly can.

And w.r.t. rrsafety's comment about working until you're 67 and dying at 67 1/2. Sure that can happen. But then there are people like my father who retired at 62 for health reasons thinking he wouldn't live much longer. He rallied and is going to be 80 next spring. He was in a catch-22 of sorts. If he had forced himself to continue working as sick as he was at the time he probably wouldn't be around now. But if he had been healthy enough to work and take social security later he might be more comfortable now.