If you love your work, a traditional retirement plan may not make sense for your goals and budget. Here’s how to keep saving for retirement while having an unconventional career.
When you think of retirement, chances are you picture a golden period: You no longer have to slog through the daily grind. You can enjoy a life of total leisure. Maybe you’ll travel or spend more time in your garden.
This is how most of us imagine retirement. But this vision has some serious flaws, and if you’re buying into it without thinking twice, you could find yourself sorely disappointed.
Let’s take a look at some of the biggest problems with the standard notion of retirement, so you can make sure you’re planning for a life you’ll really enjoy.
Retirement Problem #1: Traditional retirement is based on the assumption that you dislike your current work
Retirement, in the traditional sense, is a reward for a life of toil and sacrifice. You spend the majority of your adult life working at a job you hate (or barely tolerate), so that when you reach that magical retirement age, you can finally focus on activities you enjoy.
Who says you have to stop working at age 62 or 65? Many people have careers that give them a sense of fulfillment, accomplishment, and meaning. The idea of stopping work when they reach a certain age makes them feel anxious.
Retirement Problem #2: It defers fun and enjoyment to your later years, rather than your healthiest years
There’s a lot of wisdom in storing your money so you can take care of yourself when you’re no longer able to work. But that doesn’t mean you need to completely disavow happiness until you reach a certain age. There’s no reason why you can’t set aside money for your golden years while still making a point of enjoying today.
Money is a tool that lets you live your best life. Delaying your best life until a time when you may be too old or sick to truly enjoy it is a flawed strategy.
Retirement Problem #3: Not everyone wants a life of leisure
We’ve all heard of people who retired from stressful jobs, only to find themselves bored silly. Some retirees take a part-time job, not for the income, but just to occupy their time. All play and no work can get monotonous for anyone, and if you already have a naturally driven personality, it can drive you positively crazy. Rather than working, working, working for most of your life so you can do “a whole lotta nothing” when you’re older, why not structure your life so that each year contains a fulfilling mix of work and play?
What’s the Alternative to Traditional Retirement?
If traditional retirement isn’t the route for you, what can you do instead?
Here are several options:
Choose a career that fulfills you now
Find a career you love—one that gives you personal satisfaction in addition to a paycheck—and/or one that gives you freedom right now (the ability to work from home, independently, or towards a cause you believe in).
If you’ve always dreamed of opening a gardening and floral shop, for example, don’t defer this into a “retirement business.” You’re better off digging into that project (pun intended) during your prime working years. Yes, this may result in a pay cut—which might mean you need to scale back on other expenses, like driving used cars or living in a smaller home (see the next point). But this trade-off gives you the ability to pursue your dreams while you’re young and healthy. Work doesn’t have to be that horrible curse you must endure in order to win the reward of a few years you enjoy; it can be a form of enjoyment in itself. Let go of the notion of work as sacrifice and instead try to create a career you’re happy to spend time on.
Keep your cost of living low—and spend less than you earn—so you’re never tied down to a particular job you hate
One of the reasons people feel forced to spend their lives with their nose to the proverbial grindstone is because they feel compelled to maintain a standard of living that’s way too high. Whether they’re keeping up with the Joneses or with their own notion of what it means to be successful, they tie themselves down with hefty mortgages, auto loans, and other consumer debt that only shackles them to jobs they hate for decades. Rather than devoting your life to acquiring money to pay for stuff, take a long, hard look at what lifestyle you really need to make you happy. Do you care if you have a sprawling house in the suburbs, or would you be happy with a cozy apartment that would free up your money for other goals? Do you need that new car, or could you ditch a car altogether and rely on mass transit, giving you more financial freedom?
Enjoy several “mini-retirements” throughout your life
Alternating periods of hard work and intense rest can help you enjoy a sense of accomplishment and productivity, while also having time to relax and avoid burnout. Think of a college professor who takes a sabbatical once every seven years, or a teacher who enjoys one or two months per year to travel during the summertime.
Self-employment is one of the most surefire paths to career flexibility. Freelancing, consulting, working temporary jobs, and building side income through things like rental properties and royalties are all ways you can earn enough money to take a mini-break while preserving the flexibility to enjoy this time off. If you’re a traditional employee, your employer may be willing to grant you a flexible schedule in which you can work four days per week, but enjoy Fridays away from the office. Or you might be able to negotiate a trade: You’ll work every Saturday during the month of May, in exchange for enjoying an extra week of paid vacation time in June.
You can try negotiating for a six-month sabbatical from work once every five years, or arranging for one month of unpaid leave each year so that you can travel Europe or surf in Hawaii. No matter what type of arrangement you propose, frame your negotiation in terms of what your employer will get from this bargain, not just why it would be a sweet arrangement for you. Offering to try this out for a trial period will help reassure them and hedge their risk.
Live in a state of “permanent semi-retirement”
You can also decide to work regularly, but at a less stressful level than traditional 9-to-5, 40-hour-a-week employment. The more you’re able to reduce your cost of living, the more freedom you give yourself to choose this option.
People who choose permanent semi-retirement may work part-time throughout their lives. Or they may select their work on a project-by-project basis, dismissing any energy-draining opportunities. Or they may leave a high-pressure job to pursue one that’s more personally rewarding. The key here is that elusive work/life balance—you’re working, but this work doesn’t take up all of your time and energy, and it sometimes feels more like play than work.
Should I Still Contribute to My 401k?
Letting go of the notion of traditional employment does not mean you should stop contributing to traditional retirement accounts; it just means you should refocus your mentality so that you’re not living for that far-off, magical Retirement Day.
Vehicles like 401ks and IRAs offer tax advantages and may provide you with added security for the future. Think of them not as a retirement account, but as a pledge between you and the IRS: They may cut you a hefty tax break in exchange for you not spending that money until your 60s.
Eventually, a time will come when you decide that no employment options are on the table—either because you no longer desire to work, or because you’re no longer physically able. You owe it to yourself to still save up for that time, regardless of how you choose to structure your work and life now.
Paula Pant quit her 9-to-5 job, traveled to 33 countries, launched a business she runs from her laptop, and uses the profits to invest in real estate. She shares details about these adventures and more on her website, Afford Anything.
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While Society of Grownups hopes the information is useful, it’s only intended to provide general education. It’s not legal, tax, or investment advice, and may not apply or be useful to your specific financial situation. If you need recommendations geared to your personal financial situation, schedule time with a financial planner.