It might seem odd to say this, but I’ll say it anyway: it’s easier to keep working than retire.
I know it’s a bit obvious in some respects, but I find with all our talk of retiring early on this blog perhaps we should revisit the other side of the equation. What happens to your retirement plan if you just keep working?
Well the good news for all the people that worry about saving enough money, is that every year you keep working the lower the risk you have of running out of money. It’s sort of a three fold compounding that occurs since you are living off your work income, you are still contributing to your accounts and your investments keep growing. Also you are at the very end of your savings cycle you are at peak investment compounding so if you ride this out for a year or two longer it can significantly stack the deck in your favour. For example, if I keep working at this point my net worth keeps climbing by roughly an extra $100,000 a year.
Another positive thing of keeping working is you can finish up any key projects you are involved in at your job. I actually knew a few guys over the years that planned on retiring after they finished up their last big work project. This provides some sense of closure at work since you are not leaving mid-way on something and also lets you feel like you have left a bit of legacy behind you. Both can be important depending your personality.
Another advantage of not leaving work is you get more time to prepare key people in your life,like your spouse, for the change . So you can talk more about the change retirement will bring to your lives, buy any key items they feel you need, or add a renovation project prior to leaving. What ever support they need to help sleep at night you can help with since you are not in a rush to leave work.
Then perhaps the most obvious reason of all: staying at your job is the path of least resistance. You don’t have to explain your retirement plan to anyone, you don’t have to justify your choices or go through the emotional upheaval of retirement. You can continue along in your life if you are enjoying it.
Perhaps the only downside to keep working is well: the work. If you don’t like what you are doing it can seem more like a prison sentence. Also you lose out of another year of freedom to do what you want.
Overall, I understand why people add an extra year or two to their initial retirement goals. It is very easy to do compared to actually having to retire. So would you keep working an extra year or not?