Retirement Planning: Reasons People Cannot Retire

This ” Retirement Planning:  Reasons People Cannot Retire ” explains why many people who aspire to retire cannot fund their retirement accounts or don't have money for retirement even when they want to start to do their retirement planning.  This post contains affiliate links/ads. See disclosure policy

Retirement is a dream for many people, if not all. However, it is a topic that is often neglected or that a lot of people try to avoid discussing about.

I truly envy those people who are enjoying their retirement especially those who retire way too early.

I am looking forward to the time when it’s my turn to retire. Of course, I told my wife that I want us to retire in our early 40s. If my wife gets a job, then, we can retire way earlier than our 40s (we’re in our early 30s now). But if not, I will surely try my best to make early retirement a reality.

I feel sad or indifferent for those who are not able to retire. I’ve seen people who are past their 60s and are still working. I know a lot of people who have worked for 30+ straight years and don’t see themselves retiring anytime soon.

On the other hand, many find that they love what they do and won’t want to do anything else but just that. For this reason alone, they don’t retire by choice.

While I was driving back to Maryland with my wife and daughter after visiting my family in North Carolina, I was thinking about retirement or retirement planning. I was talking to my wife about that and how both of us wanted to travel the world.

As I was driving, I couldn’t help but ask my wife why a lot of people couldn’t retire.

From where I came from, that is, the Philippines, it is our tradition (or was) to take care of our parents once they no longer (wish to) work. Whether our parents have money saved for retirement or none at all, it is an unspoken responsibility to their kids take care of them. This means allowing them to live in our homes, buy their food, give them spending money, etc.

I don’t mind letting my parents or parents-in-law live in our home (right now, apartment). As a fact, I like them to be with us because I like family and always love to be near them.

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Retirement Planning: Why People Cannot Retire

Retirement planning shouldn't start when you are in your late 40s or 50s. It should start earlier than that. That's what my mentor told me. I agree with him. While my wife and I are fortunate to have started our retirement planning early on, some people I know who are close to me haven't started or don't see themselves starting their retirement planning.

Today, when I was driving to work, I asked myself why cannot save for retirement. I was thinking about this too hard that I forgot to turn left on the street where I work.  Lol

Here are some of the reasons that people cannot retire:

Love for the job

A lot of people love what they do for a living. But for some, they love it so much that they don’t want to retire. They are passionate about their jobs. They call it their dream job or their life. They don’t feel the need to retire because their jobs provide them satisfaction and relaxation.

I have seen quite a few people who are past their 60s and still working just because they love what they do. For them, working is equivalent to retirement. It’s the job that gives them happiness and strength.

I have to agree that staying in a job forever also makes sense if it brings out the best in you.

If you love your job, I highly recommend you read the Love Your Job: The New Rules for Career Happiness.

Read: Best Personal Financial Planning Tips I Have Ever Received

Self-employed individuals not saving enough

One of the reasons I am sticking with my employer is that I get up to 5% dollar-to-dollar matching. For me, it’s a 5% increase of my current salary. It’s free money that I don’t have to pay back.

If I ever become self-employed, I am going to lose this free money. Five percent over a number of years will come out to be a big chunk of money. Yikes if I quit my job right now.

According to Freelancers Union study, 53 million Americans are working as freelancers, which is 34% of the US workforce. According to TD Ameritrade, about 8% of self-employed Americans are not putting money to retirement savings on a consistent basis and 28% were not saving at all.

These statistics are shocking data to me but supports the claim on why people cannot save money for retirement.

You may consider reading the401(K) For Small Businesses, Solo-Entrepreneurs, and Entrepreneurs. Save a Lot of Money by Starting a 401(K)., which may or will help save more money for your future retirement.

Read: Investing for Beginners : Simple Tips To Follow

Love for their company

I know a lot of businessmen or entrepreneurs who are still working even when they have saved more than what they need during their lifetime.

Many of these people feel like it is their responsibility to keep their companies running and stay in business. They are so passionate about what they do that they feel like they can do better things at work than staying home or doing something during their retirement years.

Some still run their companies because they feel that they haven’t found the right people to takeover or manage the company. A few of my friends’ parents don’t seem to foresee retirement because they think my friends won’t be able to properly take care of the companies once they retire.

Recommended Reading: Overwhelmed: How to Work, Love, and Play When No One Has the Time

Failure to save

One of the major reasons people cannot save money for retirement is that they fail to save (enough) money for retirement or fail to start their retiremnent planning.

Some people may have more financial responsibilities that prevent them to save more for retirement. Some may go through situations that force them to fork out money from their retirement savings (e.g. medical bills, house renovation, and kids’ college education).  Some may have illnesses, disabilities, among others that force them to take early retirement.

Some may just fail to save because they shell out money buying products they want without think what and how much they need for retirement. In short, these people tend to see what’s in front of them and don’t plan for their future. As a result, these people cannot save money for retirement.

Recommend Reading: How to Retire with Enough Money: And How to Know What Enough Is

It makes sense, at first, to just look into the present because no one knows what’s going to happen in the future. But future is inevitable.  It will come whether one likes it or not. In this case, it’s better to plan for the future now.

Responsibilities extend far too long

I know a couple of people who have gone through retirement planning to find out they can’t execute it.  Why? Their financial responsibilities have been extended. Therefore, these people cannot save money for retirement.

There are those parents who become parents in their late 40s. What this means is that they need to save more money for raising children, paying for college, etc. There are those who have 1st, 2nd, and/or even 3rd mortgages that don’t seem to have end dates. Then, there people who have a mountain of debt. There are more scenarios that complicate the financial status of those who want to retire.

According to a study published by the JP Morgan Chase Institute, a typical middle-income household would need $4,800 in cash as buffer for emergency events. However, the study found out that this typical household falls short by around $1,800.

Since these people are short of funds, they would typically draw money out from their retirement savings to cover the costs of these emergencies. Less money in retirement savings means less money these people can use during retirement or more money they would have put to meet their retirement needs.

These events are those that can and will derail retirement of many people. Whether these are choices or just fall into wrong places at the wrong times, these people cannot save money for retirement and may need to delay retirement until they have satisfied these responsibilities and save enough for retirement.

It’s just some responsibilities cannot be taken care of instantaneously.

Read: Common Sense Tips To Increase Net Worth

Downplaying the future

Retirement is one of the topics that I always like to discuss with my friends. But it is one of the topics that they don’t want to talk about.

For many, retirement is far out in the future and that it’s too early to make decisions for retirement.  Many people will attempt to downplay saving for retirement because they think that they have a number of years before they need to start saving.

Unfortunately, what these people fail to see is that the best time to save for retirement was a long time ago and today is also good to start saving for retirement.  The early a person starts, the longer the money compounds.  If you invest $10,000 at 8% per year for 30 years, you are looking at $100,626, according to Delay the investment by 10 years and you are only looking at 46,610, less than half of what it would be if you invested the money 10 years earlier.

My small piece of advice is to not delay the inevitable. It’s in your best interest to care about your future now.  Remember that no one is going to hand you money when you need it during your retirement years (unless you are a trust fund baby, win the lottery, or some other unusual circumstances).

Recommended Reading: Warren Buffett's Investment Secret

College education expenses are more prioritized over retirement

When I graduated college in the Philippines, all I had to pay was, at most, $8 in tuition and fees (not including books). That’s not per month, that’s for the whole 4 years.

When I came to America and looked at the college expenses, I was astounded at the costs of college education. I couldn’t believe how lucky I was to have gone through higher education without burying myself with student loans or burdening myself or my family with these education costs.

A study conducted by T. Rowe Price found that 57% of parents indicated that college education is prioritized over retirement and that 49% of the respondent stated that they would delay retirement for their kids’ college education.

College education costs have been going up faster than people’s income. No wonder why some people cannot save money for retirement or can't retire simply because they don’t have sufficient money to fund both education and retirement.

Read: Financially Preparing for a Family

Not having access to employer-sponsored retirement plans

Sometimes, the fault may not necessarily just lie upon those (non-) savers.

According to the Bureau of Labor Statistics, just about 49% of Americans who work in private sector, 53% in civilian sector (non-federal government), and 81% in state and local government  were participating in employer-sponsored plans. One of the major problems is the lack of access to these employer-sponsored plans.

The costs associated with these plans can make a difference for the bottom line of many companies. As a result, these companies, especially smaller ones, don’t participate in these plans. More likely than not, companies that participate in these sponsored plans are big companies. However, majority of Americans work for smaller companies.

As a result of the limited number of companies participating in these employer-sponsored plans, many employees, majority of who are working for smaller companies, only put in their own money into retirement plans of their own choosing without any dollar-matching from their companies.

Read: You’re Debt Free, What’s Next?

Final thoughts:

Retirement may be far too long for you to mind about but it really isn't. Retirement planning is simply not something that is taken lightly. I suggest that it be part of your plan especially if you don't want to work forever.

Some people cannot save money for retirement but these people should not include you. You have the power to make retirement a possibility. Start your retirement planning now.

Are you working on your retirement planning? What will you do to ensure you have enough when you retire?




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