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Why working forever is a bad financial plan

Most of us know that we cannot work forever. Exhaustion and physical ability will simply be impassable barriers, preventing production and ability. That’s not to say there aren’t old people working well beyond retirement age, but such positions are rare and aren’t what most people can achieve or want. For most of us, what is preferable is creating wealth that can benefit us for the rest of our lives. However, it is worth wondering what precisely the future means if we do want to work and earn, since saving for retirement might not be possible. This is of particular importance to students who are looking to enter the world of work.

Why some want to work forever

The idea of working forever might seem outlandish: Don’t you want to enjoy yourself at some point? Yet, that misses a lot of good reasons people contemplate this in the first place. First, the idea of enjoying yourself implies people don’t derive joy from their work. Second, it also implies people can’t balance times for relaxation and destressing alongside work. Yet, we do this all the time with holidays and vacations. People plot out their lives around work all the time. Working full-time doesn’t mean 24 hour days, seven days a week. It is physically impossible to work this way, even though it can feel like that at times.

Working “forever” is meant to imply being able obtain an income, so that you can pay your bills and have food on your table every day. Due to the issues of employment and wages, people are earning less than the previous generation. Millennials are, according to many reports, earning far less than their parents.

As USA Today summarises:

“With a median household income of $40,581, millennials earn 20 percent less than boomers did at the same stage of life, despite being better educated, according to a new analysis of Federal Reserve data by the advocacy group Young Invincibles.”

Millennials are trying to save but do not have the advantages their parents have. This is not to say they cannot – it simply requires the same hard work, research and active engagement with finances the previous generation utilised for their benefit. Students are used to hard work, but now they need to use that in the workplace.

While it might be more difficult for millennials, it’s not impossible. This is why some are considering working for as long as they can: as a solution to a problem that only recently has come to be fully realised.

Thus, working forever is one response some have to the realisation the world has changed since the time of the “Gen Xers” and “Baby Boomers|.  As Quartz highlights this is may not a bad thing.

“As a start, we need to acknowledge the benefits of working longer. Not only is it a chance to improve financial security, it can also help people maintain a sense of purpose in their lives and remain socially connected with others. Research suggests that older people who stay in the labor force longer have fewer ailments than those who retire earlier. By that logic, a thriving workforce can also keep the ever-rising cost of health care and caregiving in check. And a large workforce will also expand the tax base and generate government revenue.”

Of course, many want to break free from the machine of work. They dislike the idea that, for the rest of their lives, they’re nothing but a way for companies to generate income. Work is a means to an end, where the end is freedom.

Why working forever is a bad idea

Of course, this is a debate with no easy answer. It’s always a good idea to have a retirement savings plan, since this creates a firm foundation in a world as uncertain as this one. Indeed, the problem with wanting to work “forever” is people may not be able to.

“The reality is that many people are forced to leave the workforce before they would like. Three in 10 retirees quit work sooner than expected, Transamerica found. A quarter of those were forced to quit for health reasons and 11% quit to deal with family responsibilities. Two-thirds quit for employment-related reasons, including job elimination. Half of Americans wind up retiring between ages 61 and 65.
So even if you plan or want to work into your 80s, say, you may not be able. If that’s the case, you will look back to your 20s and 30s and wish you had been saving more diligently.”

There are, of course, alternatives to this. You can start your own company or work jobs that demand less, increasing the chances of being employed late in life. Yet that is not guaranteed. What is actionable right now is saving where you can. It is better to be conservative while we are young and recent students – in our 20’s and 30’s – than later, when there’s a chance of earning less later in life (if at all). A proper retirement plan must be considered as life marches on, since the world won’t stop being a place of uncertainty for people’s finances.

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