The Death/Retirement/Disability Calculation

We all have to make some hard decisions in our lives, but one of the hardest is figuring out when to stop working.

For some people, of course, there really is no choice, because they have not accumulated the savings that would give them the freedom to make a judgment.  They simply have to keep working to survive.  But if you have worked hard, and planned, and scrimped to put money away toward retirement, you ultimately will confront the issue of whether you have saved enough and can stop working, or whether, “to be on the safe side,” you should work a little bit longer and save a little bit more.

It’s a tough choice because there are no easy answers and the consequences can be profound and, in some unfortunate instances, appallingly final.  In one direction, you can retire too soon, see your nest egg take a hit in a “market correction,” and realize with a sinking feeling that you simply don’t have enough to have the kind of retirement that you hoped to have.  No one wants to be a cash-strapped retiree who becomes a burden on their kids.  But in the other direction, if you decide to keep working, you may be struck down, or left disabled by illness, and never have the opportunity to enjoy the fruits of your labors.  Add in a few more moving parts — like whether you are someone who really enjoys your job and your co-workers, or whether you have incredibly long-lived ancestors or alternatively an apparent genetic predisposition toward certain disease, or whether you have family members who could use some help, or whether you are a worrier by nature and want to try to build enough of a cushion to provide complete retirement peace of mind — and the decision becomes even harder.

It’s also a tough choice because you can’t help but be influenced by the personal stories of the people you know.  A hale and hearty former colleague who is seemingly on the cusp of retiring dies suddenly, and you remember that one of the last times you spoke to him he was laying out his plan to work just a little bit longer before hanging up his spurs, and you shake your head and feel a chill.  A new, older acquaintance explains that he had retired, went through the market downturn in 2008-09, realized with a sinking feeling that he had pulled the trigger too soon, and scrambled to go back to work and keep earning, and you shake your head and feel a chill.  And then there are friends who develop serious health problems, friends whose siblings are in serious financial distress, friends whose spouses unexpectedly need surgery.  The list of possibilities is endless, and each little personal story tugs you in one direction and then in the other.

The most uncomfortable realization of all is that there is no magic calculation, no absolute certainty, and no clearly correct answer, and the consequences are huge.