Why Retiring At 62 Is A Bad Idea
In Singapore, the official retirement age is 62. And because it’s “official”, it invariably leaves an imprint on the back of the minds of working adults … that they can “finally retire when they reach 62.”
What retirement means differs from person to person of course. To some, it means living off their nest egg and not having to work anymore. They can finally go see the world, pick up a new hobby, spend more time with their loved ones.
To others, they might feel they can’t just stop working per se. To have nothing to do, and idle all day, is a definite recipe to accelerated degeneration. They’ll probably want to continue to work, or at least have activities to occupy their time, and mind.
Then there are those who feel they don’t have a choice and cannot afford to retire. Perhaps they haven’t saved up enough to stop working. Maybe they are still in debt, or still have mouths to feed, or have rent to pay.
Whatever the case may be, waiting till 62 before you decide whether or not you want to (or can afford to) retire is a bad idea.
It’s too late
Too late for what? A lot of things!
I’m sure everyone, and I do mean everyone, can feel that our physical bodies isn’t the same as what they are 10 years ago, or 5 years ago, or heck, even 1 year ago.
The slowing rate of recovery from physical activities, the aches and pains, the falling metabolism, the lower energy are actual effects everyone experiences as he/she ages.
Oh don’t get me started on reading glasses.
Sure, you can eat well, exercise regularly and meditate all you want, but all things being equal, a 20 year old body trumps a 40 year old one anytime.
So you want to travel the world only when you retire? Want to take on all those fun activities only after you stop working? The more appropriate question should be … “Can you?”
Will you have the physical agility to keep up with your grand kids? Will you have the stamina to play basketball on the court, or go for a 10-day hike?
How about retiring … NOW?
At this point, your inner voice might already be screaming.
“How can I afford to retire now?”
“Are you mad? I’ve got bills to pay, I haven’t saved up enough yet.”
“I can’t just stop work like that. I have so many other responsibilities.”
Don’t get me wrong; all these concerns are valid for sure. But then, that also depends on how you define retirement.
The truth is, it doesn’t take a million dollars to do a lot of the things most people imagine they would do when they retire. Unless, of course, you literally want to buy a multi-million dollar dream house.
That aside, if you take a good look at your retirement dreams, there’s a good chance you can afford and start a least some of them … right now.
Why not pick up the piano lesson (or tai chi, or dance, or whatever) now? Carve out 1 hour every Saturday perhaps. Just get it going.
Want to go to Spain, or see the Northern Lights, or hike Annapurna? Plan to go this year. Check out the flights, book the hotels, set a date. Do it now.
Spend more time with your loved ones? Pick up the phone now. Schedule a lunch date, or dinner date, or afternoon tea. Now.
In other words, live life now. Not at 62.
Regardless of how far away you are from the age of 62, the thing is, no one really knows what’s going to happen 10 years from now, or 5 years from now. You won’t even know what’s might happen tomorrow. So why wait?
And … if you’re already 62 or older as you’re reading this, you still have the power to do things now.
Responsibilities, Finances and all those “Buts”
Don’t get me wrong. In no way am I suggesting you just drop everything and party like no tomorrow.
Everyone has responsibilities to take care of. And a large part, if not mostly, are the financial considerations.
And some of you might still have the lofty goals and big financial dreams too, which is fine and good.
So how can you live life now, uphold your responsibilities and still work towards your financial goals?
If it’s been said once, it’s been said a million times; make your money work harder for you.
Regardless if you’re working for someone else, or you’re running your own business, you are making an active income right now.
Most people who don’t know better will simply leave their money in the bank, or whatever is left of it after paying off all expenses.
If it isn’t already obvious to you, plainly leaving your money in the bank is allowing inflation to eat away at your hard earned money.
Plus, the cost of living in Singapore isn’t exactly getting any lower. Never mind that Singapore is already ranked the most expensive city in the world, things are going to get even more expensive here.
Even if we ignore accommodation and transport prices, look at the impending GST hike and the increased airport charges just to fly out of the country.
We just can’t shake off the uneasy feeling of wondering “what prices will increase next.”
If you’re like most people, I definitely can understand why you might feel it’s a challenge to “live the dream” now.
Investing is not a luxury
If you want any chance at all of getting out of the proverbial rat race, then you can’t “wait till things get better” before you start investing.
I’ve already mentioned earlier; inflation is killing you. And every second you’re not investing is a second that is not helping you compound your returns.
The good news is, investing doesn’t have to be a scary thing. It doesn’t take a finance degree to get started and do well too.
To break it down really simply, your main (or initial, at least) goal is to beat inflation.
So start putting your mind to work and think about how you can generate 5%, 10% or more on your money.
What instruments are there that allow you to do that?
Can you invest in property? Can you put your money in equities? Should you hand your money over to a fund manager?
Before you take any action and put some skin in the game, educate yourself. Don’t dive in blindly and hope you’ve made the right bet. That’s just gambling, plain and simple.
Do your homework, learn how to invest. Know what your risk appetite is, be familiar with the fees involved (especially those darned fine print), and understand how your returns are being generated.
If it’s too complicated, too confusing … if it’s outside of your circle of competence, don’t do it.
Now, don’t get lazy and pass your money to some “advisor” hastily, hoping that he/she can grow your money for you. It’s your money, so it’s your responsibility, not theirs.
Learn the ropes, start small, avoid exciting shiny objects, and build up your asset base slowly and steadily.
If you invest in equities, for example, and put your money in great companies, it won’t be long before your dividends start paying for some of your “doing it now” dreams. Then all of it. And more.
The good news? With time and compound interest on your side, not only are you living life now; by the time you actually reach the official retirement age, you’d already indeed have accumulated a comfortable nest egg and you can “officially retire” … if you choose to call it that.
Then whether or not you continue to work after that is completely by choice.
How empowering is that?
So don’t wait till 62 to start doing the things you’ve always wanted to do. List them down, and start checking them off, one item at a time.
That’s what makes life meaningful. That’s what makes life worth living.
And while you’re at it, learn to invest properly, and start beating the heck out of inflation.
When all is said and done, you’d be glad you started now.
This article was kindly contributed by Value Investing College.