One of the most popular segments on my CNBC show was “How Am I Doing?” Viewers would call in and tell me everything about their finances and wait for me to judge whether their retirement plan made the grade. Typically the central question was if they could retire in their early 60s.
Let’s just say I gave out a lot more D’s and F’s than A’s.
If I resurrected “How Am I Doing?” today, I’d be handing out plenty of failing grades to anyone who thinks they will be able to retire before they turn 70.
Yes, you heard me right: 70 is the new retirement age—not a month or year before.
Don’t “Oh, Suze” me just yet. Please hear me out.
Look, I totally get that if you are reading Money you’re probably a diligent saver. But it’s always dangerous to assume you’re better off than you really are. You likely have plenty saved up to breeze through 15 years or so of retirement. But, people, if you stop working in your 60s, your retirement stash might need to support you for 30 years, not 15.
I want to be very clear: I am not talking about a small outlier subset of people who stand to live an unusually long life. Healthy people in their 60s today have about a 50% chance of living into their 90s. Can you honestly tell me you’re 100% sure you will not run out of money if you start spending down your retirement funds in your 60s and end up living into your 90s?
I speak from experience. My mom lived to age 97. I hate to think about what her life would have been like if I wasn’t able to make sure that her financial needs were taken care of. I am grateful I had the resources to provide that care. My question for you: Do you think your kids would be able to easily step in to help you if you ran out of money?
And then there’s the cost of health care. You do realize that Medicare covers only about 70% of health care costs? Between Medicare premiums, supplemental coverage, drug coverage, and out-of-pocket expenses the typical retiree is on the hook for about 30% of health care costs.
And given the chaos in Washington, we don’t know what our share of retirement health care costs will be in the future. (Yes, I said “we.” I am 66 and enrolled in Medicare.)
The bottom line is that working longer is the key to a secure retirement. Every dollar you don’t spend in your 60s is a dollar that can keep growing for your 70s and beyond.
So I want each and every one of you to make working until 70 (or later) your goal. For some of you, full-time work will be the best insurance to making sure your money outlasts you. But for many of you who’ve done a great job planning, part-time work may be all that you need.
Okay, so how can you reset your retirement to age 70?
Step 1: Delay Tapping Social Security Until 70
When people tell me they plan to retire in their early 60s, part of their strategy is to start taking their Social Security retirement benefit at 62, the earliest claiming age. People, please listen to me: That is one of the biggest mistakes you will ever make!
Wait until 70 and your annual benefit will be 76% higher than what you’re eligible for at 62. That higher payment can be a huge help in supporting you through a long life.
My advice: If you’re married, the higher earner must, must, must delay Social Security until 70. If the other spouse wants to start earlier—I seriously hope not before age 67—I will allow it. (That said, if you have a medical condition that prevents you from working, or raises the likelihood you won’t live into your late 80s or 90s, then claiming earlier may make sense.)
All of you should absolutely know how much Social Security you are projected to get. I want you to go to the Social Security website, where you can get a personalized estimate of your potential benefits.
Step 2: Lay the Foundation Now to Work Longer Later
I am not shy about peppering my friends with questions concerning their retirement. And they always give me the same pat answer: “Oh, Suze, don’t worry. I am never going to stop working.” And these are people with office jobs, not entrepreneurs.
I worry. A lot! Working till you die is nuts, and even working into your 70s is a risky bet. Take a look around your office: How many 70-year-olds do you see at your company?
Even if you are self-employed and are not worried about anyone laying you off because you’re the boss, life can still get in the way. About 30% of people surveyed by the Transamerica Center for Retirement Studies reported that they retired earlier than expected because of health issues.
I realize you may be getting annoyed with me right about now. I just told you to keep working until 70, and now I am commiserating with you that it can be very hard to pull that off. Hard—but not impossible.
This is not something you can just flip the switch on when you hit 60. The financial and employment planets don’t magically align to give you exactly what you want and need. It’s gonna take some work to be able to keep working on your terms.
Start a conversation with your employer—the right way. If you love your current employer (and they, you), it certainly makes sense to start talking at least two years or so out about what a reduced job might look like.
Don’t just tell your manager and HR you want to work part-time. That creates a headache for them. Present them with a vision of what roles you can fill and what problems you can solve as you downshift.
Stop the coasting. Right here. Right now. Doing just enough to get by puts a well-deserved target on your employment file. If you’re lucky enough to have a job that provides ongoing training opportunities, or continuing ed, you are insane not to squeeze out maximum value.
With the explosion of online education, you can polish existing skills or pick up valuable new ones from the comfort of your home computer. Does free fit your budget? Check out EdX, a consortium of colleges that offer free courses, as well as “MicroMasters” programs for a fraction of the cost of a full-blown on-site master’s. Your local community college can also be an economical way to pick up new skills.
Step 3: Truly Enjoy a Secure Retirement
I bet plenty of you found all this depressing. Cursing me a bit? No offense taken. I know this is a lot to digest. But here’s what I need you to know: If you’re fuming now, you’ve got it all wrong.
Having a clear-eyed vision of how navigating your 60s can set you up for a worry-free retirement should make you feel empowered. It’s the difference between holding your breath that everything will work out okay, and taking the steps today so you can confidently breathe easy knowing you have a plan that will work out just great.
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