Peter Pan is the fictional boy who never wants to grow up. He lives in “Neverland,” a fantastical world of endless adventures with pirates, fairies, Native Americans, crocodiles and other characters.
Today, there is a group of adults who also live in their own “Neverland” where no one retires but continues to work forever – or at least as long as possible. Many of these retirement naysayers love their work or business and can’t envision doing anything else. They expect to be working long past traditional retirement age.
Another group of adults wants to continue working simply because they haven’t been able to save enough for retirement. They can’t see themselves ever accumulating enough assets to stop working and need to continue simply to survive.
Predominantly, the top reasons for putting off retir ement as long as possible are financial. Nearly half of those who want to delay retirement as long as possible report the inability to afford retirement (49 percent), healthcare costs (46 percent) or wanting to make sure they have enough money to retire comfortably (44 percent), according to the Employee Benefit Research Institute1. Other reasons are higher-than-expected cost of living or the need to cover immediate expenses.
Whatever the reason, 31 percent of working Americans said they expect to never retire or will retire sometime after age 70, according to the EBRI. The fact is that only 7 percent of retirees or people over the age of 70 actually reported this intent as becoming reality.
The barriers to continue working longer tend to be health related. Often, our health deteriorates gradually or sometimes quickly and unexpectedly.
Nearly one in two people retire sooner than they expect (48 percent), often due to a health issue or disability, EBRI reports. Other issues impacting early retirement include changes at work and, for some fortunate souls, accumulating the necessary resources to afford early retirement.
Whether retiring or not, many people face significant health problems as they get older and with them, significant healthcare costs. Like the crocodile that stalked Capt. Hook, constantly looking to take a bite out of the swashbuckling pirate, healthcare problems and costs shadow many retirees.
The average retired couple will spend $285,000 for medical care during the rest of their lives, according to the latest Fidelity Retiree Health Care Cost Estimate2. Health care costs will likely swallow a larger share of retirees’ disposal income going forward, Fidelity projects.
The need for and expenses associated with long-term care throw gasoline on the fire. The cost of a semi-private room in a nursing home is $235 per day or $7,148 per month, according to the Genworth 2017 Cost of Care Study 3. Without the benefit of pixie dust sprinkled by Peter Pan’s friend, Tinker Bell, today’s 65-year-old has nearly a 70 percent chance of needing some type of long-term care.
Those figures may be used by financial advisors not to discourage clients from thinking they can work longer but make the point that they may not be able to fully realize their plans and therefore need to prepare financially.
It’s simply prudent to save as much as practicable to prepare for what life may throw at us. Someone who wants to continue working forever may get his or her wish for a while – more people are living into their 90s and even past 100 – but still may face barriers to their plans eventually.
That may mean saving in a defined contribution plan or other retirement savings plan, taking advantage of a Health Savings Account, buying a deferred annuity, securing long-term care insurance or other financial hedges against debilitating or chronic health issues at older ages. It may also mean continuing to work longer to build a larger nest egg if someone’s health allows, especially if they enjoy their labors or simply need to continue working longer for a while.
The inclination, timing and experience of retirement are all highly personal undertakings and are defined by each individual. For many people, working longer – not necessarily forever -- is part of that equation.
So when advisors pay a visit to a client in Neverland – whether it’s Neverland, New York, Nevada, New Mexico or somewhere else – listen to the underlying rationale for not retiring. And then help ensure that your Peter Pan understands he may be unable to outrun the crocodile forever.
E. Thomas Foster Jr. is head of strategic relationships for retirement plans for Massachusetts Mutual Life Insurance Co. (MassMutual).
1 Expectations about Retirement, Employee Benefit Research Institute, 2018.
2 How to plan for rising health care costs, Fidelity Retiree Health Care Cost Estimate.
3 Genworth, “2017 Cost of Care Survey,” June 2017.
4 How much care will you need, Longtermcare.gov,