Suze Orman Says Working Longer Is Not a Retirement Plan — Here's Why

High living costs have delayed retirement plans, with some people deciding that they will work until they die. Financial guru Suze Orman recommended a different approach in one of her blog posts. 

She believes that people should look to improve their finances right now with actionable steps so they have the option to retire sooner. Even if you want to work longer or believe you will have to work until your final days, it’s still good to pay off debt, invest and follow good money habits. 

Making extra payments toward your mortgage, maxing out contributions to retirement plans and cutting expenses are some of the ways to improve your retirement plan, but you need a good “why” to take action on those things. These are some of the reasons why working longer is not a retirement plan.

Your Health Can Change Quickly

Giving yourself the option to retire earlier isn’t a mandate, but it’s a good safety net in case you must stop working. Some people work in physically demanding jobs that become impossible to perform in their late 60s or early 70s. 

Some people get caught by surprise when reviewing their finances and discovering they can’t maintain their lifestyles without the job. While some people operate under the mindset of only having to work for another one to two years, someone who planned to retire at 67 may have to leave the workforce at 60.

Some people also incur workplace injuries that prevent them from working for as long as they planned. While working longer is still possible for many people, you shouldn’t put all of your chips into that strategy. Your life will look completely different in five, 10 or 15 years compared to now. Saving for retirement and making the right money moves now will give you more options in the future.

Have To Work vs. Get To Work

Giving yourself the ability to retire early doesn’t mean that you have to take up that offer. However, some people find themselves in jobs that they do not like. These people have to work to pay bills, but some of them would prefer to do something different.

Other people enjoy their work but find themselves in toxic environments that can drain the fun out of the job. These people get to do work they enjoy but have to do it with co-workers they don’t like.

A solid financial foundation gives you the flexibility to pursue different job and career opportunities that are in healthy workplaces and let you do the work that you enjoy. Then, you get to work and it’s something that you enjoy rather than having it feel like a necessary burden.

Inflation Can Outpace Your Wages

The final risk with relying exclusively on working longer is that inflation can outpace your paycheck. Unless you are getting a 3% raise each year, you are likely not keeping up with inflation.

Then, you will have to work longer hours or cut your expenses to stay afloat. However, people who invested in assets can keep up with inflation. The S&P 500 has produced an annualized 17.4% return over the past 15 years, breezing past inflation in the process. 

Making all of the right money moves makes it easier to retire on your terms. You won’t have to work longer to survive financially, but it can still be good to work past retirement age for a sense of purpose and fulfillment. 

This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.

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