most people only have an income to last them about two decades worth of retirement. I have a friend who is 88 years old and he still works four days a week and loves his work. There are also studies that suggest that when people lose their sense of purpose, their bodies quickly succumb to age. Staying active and interested in what life has to offer literally keeps you young! That’s not to say that you must keep working at the pace of a 30-year-old when you’re 75. However, it can really keep your mind sharp and your bank account afloat to find some way to meaningfully contribute. 2. Anticipate Inflation and Build a Hedge Against It Another drawback to retiring too early is the impact of inflation on your fixed income. Of course, money is always being affected by inflation, yet you certainly feel it more when you’re living on a declining balance. Many people retire with $1 million thinking they’ll never run out of money. Yet that’s only 10 years of $100,000 income if you think about it. Consider how far $100,000 stretches today. Then think about 30 years from now. It is not possible that money won’t stretch as far. If you spend $1,500 on food and gas with a 4.5% inflation rate, 10 years later it will cost you $2,329 for the same products. Maybe it will cost you even more. Suddenly, your 10-years income has shrunk to five, and that’s not even considering taxes. Inflation is a killer of your income, so you likely need to save much more than you think you need. By working longer, you also delay your need to live on a fixed income and create more savings for yourself. It just makes good common sense. 3. Save More Now Because it will Cost You More in the Future This may seem like a no-brainer, but the more you save now, the better prepared you’ll be for the future. If you’re saving 10%, try for 20%. And if you’re saving 20%, try aiming for 25% or even 30%.
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