Is “I’ll Just Work Longer” Really a Retirement Plan?

Is “I’ll Just Work Longer” Really a Retirement Plan?

For many Americans approaching retirement, working a few extra years can feel like a built-in backup plan.

If the market doesn't cooperate, inflation increases expenses or retirement savings aren't quite where you'd hoped, the solution may seem straightforward: I'll just keep working.

But what happens if that decision isn't entirely yours?

Changes in your health, family responsibilities, employer or the broader job market could affect how long you're able or willing to remain in the workforce. Technology is also changing the types of jobs available and the skills employers need.

That creates an important distinction when planning for retirement:

Working because you want to can be very different from working because your financial plan requires it.

On a recent episode of the Retirement Compass podcast, Stonebridge Wealth Systems co-founders andFinancial Advisors Tim Kulhanek and Jeff Gove discussed why continued employment should be considered as part of a broader retirement strategy rather than simply assumed to be available.

Let's Talk About It >>

What If Your Retirement Date Changes?

There's nothing inherently wrong with planning to work later in life.

Some people enjoy their careers and want to continue working. Others appreciate the routine, relationships and sense of purpose that employment can provide. Part-time work may also provide additional income during retirement.

The challenge comes when working until a specific age becomes necessary for the retirement numbers to work.

Maybe you're planning to retire at 65.

Maybe it's 67.

Maybe you've decided to continue working until 70.

Whatever your target age, it's worth considering another scenario:

What happens if you retire sooner than expected?

A change in employment, health or family circumstances could move your retirement date forward. While no financial plan can predict or eliminate these uncertainties, evaluating different scenarios before retirement may help you better understand your options.

Instead of only asking, “Can I retire at 67?” consider questions such as:

What could happen to my plan if I retire a few years earlier?

Where will my retirement income come from?

How much could I reasonably withdraw from my savings?

How could a significant market decline affect my retirement strategy?

What role could Social Security play in my income plan?

How might taxes affect the income I receive?

What healthcare expenses should I consider?

What financial decisions today could give me additional options later?

These questions can help turn a retirement date into a broader retirement strategy.

Retirement Means Replacing More Than a Paycheck

One of the biggest financial adjustments in retirement is transitioning away from a regular paycheck.

During your working years, there's usually a predictable rhythm: earn income, receive a paycheck, pay expenses and save for the future.

Retirement changes that structure.

Your income may instead come from several sources, including Social Security, retirement accounts, pensions, taxable investments or other assets.

That makes retirement income planning about more than simply accumulating money.

It's also about determining how your savings and other resources may support your spending needs over time.

Some questions to consider include:

• Which accounts will provide your retirement income?

• How much should you withdraw?

• Which accounts should you consider drawing from first?

• When should you consider claiming Social Security?

• How could withdrawals affect your tax situation?

• How might inflation change your spending needs?

• How could market volatility affect your withdrawal strategy?

The appropriate answers will vary based on each person's financial circumstances, goals and risk tolerance.

A Collection of Accounts Isn't Necessarily a Retirement Strategy

A 401(k) can be an important retirement asset.

So can an IRA, Roth IRA, brokerage account, pension or Social Security benefit.

But each represents only one component of your financial life.

A broader retirement strategy considers how those components interact.

Investments, retirement income, taxes, healthcare expenses, Social Security, estate considerations and your personal goals may all affect decisions you make before and during retirement.

That's why retirement planning involves more than answering the question, “How much have I saved?”

It also means asking:

“How will I use what I've saved?”

What Do You Want Retirement to Look Like?

Retirement planning isn't solely about account balances.

It's also about determining what you want those financial resources to support.

Maybe you'd like to travel.

Maybe you want to spend more time with your children or grandchildren.

Perhaps you'd like to volunteer, pursue hobbies, help family members or simply have more control over how you spend your time.

Those goals have financial implications.

Understanding approximately what your desired lifestyle could cost and comparing those expenses with your available resources can provide useful information as you make retirement decisions.

It is also important to recognize that retirement projections are based on assumptions. Investment returns, inflation, taxes, healthcare costs, longevity and changes in law or personal circumstances can all affect actual results.

A financial plan cannot remove those uncertainties, but it can provide a framework for evaluating them and making informed decisions as circumstances change.

Already Have a Financial Advisor? A Second Perspective Can Still Be Valuable.

Having an existing relationship with a financial professional doesn't mean you can't ask additional questions about your retirement strategy.

During the Retirement Compass discussion, Tim described Stonebridge's initial conversations as an opportunity to listen, ask questions and better understand what someone wants retirement to look like.

Stonebridge uses a three-step approach called the NAVI Process: Needs Analysis, Vision and Implementation.

The process begins with understanding your circumstances and goals before considering potential strategies.

If you're approaching retirement, a review of your current strategy could include questions such as:

• Am I on track for the retirement I'm envisioning?

• What happens if I retire earlier than planned?

• Where will my retirement income come from?

• Have I considered how taxes could affect my strategy?

• How could market volatility affect my plan?

• Are there financial risks or considerations I haven't accounted for?

The answers may confirm aspects of what you're already doing or identify areas that warrant additional consideration.

Don't Let “I'll Just Work Longer” Be Your Only Backup Plan

You may choose to continue working well into your 60s or beyond.

You may decide to retire earlier.

Or circumstances may ultimately change the timeline you have in mind today.

The important thing is to understand how those possibilities could affect your financial situation before you're forced to make a decision.

If your current retirement strategy depends heavily on working until a specific age, it may be worth evaluating what would happen if retirement arrived sooner than expected.

How Would Your Retirement Plan Handle the Unexpected?

Stonebridge Wealth Systems works with individuals and families to evaluate retirement income, investments, taxes, healthcare considerations and legacy goals as part of a coordinated financial planning process.

If you're approaching retirement and would like another perspective on your current strategy, you can schedule a complimentary initial conversation with a Stonebridge Financial Advisor.

Call 888-260-0926 or visit stonebridgeiwm.com to get started.

Stonebridge Wealth Systems has offices in Kearney, Grand Island, Lincoln and Omaha, Nebraska.

Important Disclosure

This material is provided for general informational and educational purposes only and should not be construed as individualized investment, tax or legal advice. The information presented is not intended as a recommendation or solicitation to buy or sell any security or to adopt any particular investment strategy.Financial planning and investment strategies involve risks and uncertainties, and actual results may vary based on individual circumstances, market conditions, tax laws and other factors. Individuals should consult with appropriate financial, tax and legal professionals regarding their specific circumstances.