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 Investor.gov. 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).
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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?
These are all good reasons/excuses why people cannot save. I am a firm believer that most people can save something and they tend to get themselves into situations where they “can’t.” Either with unsustainable spending patterns or getting into debt obligations that force them into the non-saving situation.
I believe in what you said. I believe that there is always a room to make savings work. Any small amount can go a very long way.
Yes saving for retirement is very important and something I must think about. Your article has got me thinking!
Thank you for reading. Any small amount towards saving can go a long way.
I have met seniors who retire without having saved anything substantial at all, being at the mercy of the kindness of their children. This is definitely something I do not want to happen to me. My wife and I have to be able to live independently in the financial aspect when we are seniors.
I see that situation where I came from, that is, the Philippines. A lot of retired or parents become dependent on their children. Nothing wrong about that because it’s the way of life there and that’s our culture or tradition. But for me, I like to be independent as much as possible.
I like that you acknowledge some of the realistic reasons that hold people back from saving for retirement. Life isn’t always as straightforward as the advice in personal finance blogs. But of course it’s still important to plan for the future.
Yes. Life isn’t always straightforward. Having said that, it is always in our best to make plans for the future because nobody will help us other than ourselves. It’s better to start early.
Great points. I have a co-worker who decided to retire but at the last minute had a change of heart. Money is not the issue (there is a great pension plan and the person also said they had enough saved). It was that they’ve been working at this place so long that they wouldn’t know what to do with themselves if they retired. It’s as if they’re scared that they wouldn’t know what to do with themselves if they stopped working. There are also some here who can’t retire even with the pension because they live above their means. Same with your point about paying for college, I have co-workers who continue working to help support their kids…even adult kids!
Sometimes, people find the job that they want to be in forever. For them, retiring isn’t a necessity because they like what they do. I believe that at end of the day, as long as you are happy with what you are doing, then, it’s all good.
Absolutely true…if you are passionate about what you do, you never have to work a day in your life. Although in this case, I don’t think they were passionate about their job or love it. It’s just been a routine for them and it’s hard to change that routine once you’ve been doing it for so long.
I second that.
Saving money for retirement is much easier in Norway where we automatically save when we work! I am saddened by countries where this is not possible!
NIna
I didn’t know that. How I was it’s the same case with all other countries of the world.
The earlier the better if you get a stable job while you’re young. Unfortunately for some people, they live on a pay to check basis and saving becomes very hard, but you have very good points!
I loved reading this
Sometimes, it’s hard to save especially when you have a lot of responsibilities. When this happens, those people may need to work on some side hustles to make their situations better.
My hubby and I both have retirement accounts set up through work and contribute monthly. Now, are we saving enough?? Probably not! Great read! Thanks for sharing!
That is always the question that many people ask themselves. The best way to do it is to sit down and assess what you need in the future. The only downside is that nobody knows that they will in the future. Having said that, it’s never a bad thing to estimate what you may or will need in the future. It’s better to estimate and prepare than just wing it. The more your prepare, the better chances you have in making a better retirement fo ryou and your loved one.
Those are all accurate. There are always going to be unavoidable expenses, so it’s better to adjust your budget instead of failing to save a few pennies.
Preparation is always better than status quo. You’ll never know what’s going to happen, which makes it even a better reason to save more.
In our days, who can afford to save money for retirement? Actually, who can afford to make enough to buy a flat? I am part of the Millennials generation and I look worried to the future because the prices are so high and the cost of living is so high that saving for retirement is our last worry.
I agree with you, that is, the cost of living is becoming unbearable. One good option is to work and live somewhere where your money can go a long way. Here in the US, there are places where the cost of living is way too low and you don’t need a high income to live comfortably.
I’ve always thought of my retirement. When I worked after college, I took a retirement plan 2 years after. I also make sure I have enough savings for the future. Right now, I consider myself a bit of being in hibernation or semi-retired as I moved back to the province and currently does freelance work, which is way less stressful than my work back then in Manila. I’d probably go back to the workforce anytime soon, or probably not. But being in the province makes retirement less daunting than when I was in the capital wherein not having work for a few days (and not earning, while in between jobs) would get me on my toes. I learned a lot of insights from your post.
Manila has become too expensive. I used to live there. From time to time, I visit there and see the prices are ridiculously high. Manila isn’t the Manila I used to know. But to your story, yes, living in province is sometimes better because you live in peace. Plus, people are nicer, too.
Yay, what an eye-opener. It’s nice to get reminded about retirement from time to time. I’m 25, I like to travel, and I want to study further here in Europe. Budget is really tight, so it really is not easy to save for retirement. I pay SSS in the Philippines, so I hope that would be enough for my retirement. 😛 And I agree with the comment above. Norway is awesome when it comes to social benefits.
I used to live in the Philippines and my mom used to have her SS as additional income. It was never enough. The only good thing is that all my brothers and sisters take care of my mom. But of course, this situation is not something that’s applicable to many.
I love your post. The number ONE reason I feel, is related to what you have stated – downplaying the future.
I feel it is that a lot of people DO NOT know the importance of thinking about the future and planning for it. If people knew the value of knowing, only then could measures be taken to improve one’s life.
THINKING ABOUT RETIREMENT SAVINGS
A lot of people specifically the young ones think they have forever to save. Unfortunately, this is most certainly false. Everyday we grow older and everyday we get nearer retirement. It’s in the best interest of young people to think now about their future. Time really flies and future will be here without your knowing.
Just between paying off our own college loans and saving for our 3 kids to go to college, it feels like it will be impossible to ever get ahead!
It may seem impossible but it’s always possible when you take time to assess your situations. I believe every situation has its own solution. You may just need to take more time to figure out what that solution is.
I think it’s hard to save especially when you are supporting some one. It really takes discipline to set aside some funds and live by your means.
It is hard but it is doable with discipline, patience, and perseverance. I am the only one earning right now. I have a wife and a kid who I support. It’s hard but it can work.
All of these points are so true, this is exactly why I can not save. Not just for retirement, but for anything really!
Any effort to try to save is a good effort. I hope you can save in the future.
Savings are really important through the whole life, they can save your life sometimes. And people sometimes are not trying and are irresponsible. Time flies people should consider reading this helpful post.
Thanks. Saving is really important because time really flies and next thing you know you are about to retire.
Yes, sometime it is not possible because of some unforeseen circumstances but it is good to start saving early.
There are situations that may prevent us from saving. But it is always a good to try saving.
This is such a good read. I would also love to retire on my early 40’s. However, I do not have a retirement fund yet. I have to work on it asap!
It’s never too late to start saving for retirement. It’s better late than never as many people would say.
I wouldn’t have thought that love of your job would prevent you from saving for your retirement. I would more think that it would prevent you FROM retiring. Spending too much has always been on the top of my list.
Some people don’t retire because they love what they do. It’s not the common practice but it does happen to a lot of me. Actually, I know a handful of people who are still working just because they love their job.
Saving for retirement is essential! But I can see where it can be hard especially if it is not in your work program. It is hard to do by yourself and something that takes a lot of planning.
That is also true. But it never hurts to try at least. My mom used to tell me that it’s better to try and not succeed than not try and think what could happen if you did try.
I am one such person for sure. Always have 100 excuses to burn my monies! Thanks for this post. Got a reminder of sorts.
It’s never too late to start saving for retirement. I’ve heard people making excuses but don’t seem to notice that they are making these excuses. Kudos to you for acknowledging this. Next stop, start saving money for retirement.
Love for the job is indeed a factor.. My dad loves his job too much to let it go!!
Sometimes, people don’t retire not because they don’t have money. They don’t retire because they love what they do and don’t know what to if they don’t have that job anymore.
Very interesting post ! I am just 26 but it is never too early to think about retirement I mean about money for retirement ahah 😉
There’s no better time to plan for retirement than it is now. Any small contribution towards your retirement can or will make a difference in the future.
This truly is a wake-up call even for younger people like me! It’s so important to save up for retirement! 😀
I believe it is truly important to save because one day when we retire who do we lean against when we need money. The answer could be our kids but it’s better to be independent and not reliant to other people.
As much as I love my job as a high school teacher, I still would much rather be retired! 20 years to go and I can! I put money towards retirement, but not enough!
Same here. I love my job but I like to and will retire in the future. This is why I am saving like crazy.
Perfect for a young family like my own. The struggle of saving for the future is really there. But it’s very important since we have little ones too.
Sometimes, I just think that I am saving for my daughter’s future. When I do this, my eagerness and willingness to save more shoot to the moon.
Early morning digest. I love this. I believe, the moment you discover your needs in life – things you must cater for is greater than your income, will definitely pose a challenge towards savings. Regardless, any little amount should be encouraged to save for future purposes.
Yes, any small amount can make a big difference. I rather save $1 than not save anything at all. Of course, I like to save more.
You made me want to say Carpe Diem when talk about saving money for retirement. But you are right, haha, we all should save for retirement!
Haha. I remember that term from my college days. Yes, we should save, that is, if we want to retire and not work for forever.
My dad set up my retirement account when I was about 16 years old! lol. My parents are big on saving, so I have the concept implanted in my brain!!
That’s nice. While your situation is better than my situation when I was growing up (in terms of finances). My parents taught me the value of being practical and saving as much as I could. I am very that up to this day, I am using that lesson.
I liked your article, but the pop-ups before I was able to read it comfortably almost put me off…
I apologize. I assume you were using your phone. I hope you were still able to read the post.
Some great info! I was actually looking into a retirement fund this morning.. Thanks for sharing!
Thank you for reading. Hope you took some lessons from my post.
I personally think that downplaying the future is the biggest one. It’s like why people don’t buy life insurance, or at least most younger people don’t. They just don’t really think about it because “it’s so far in the future” or “there’s plenty of time”. They’d rather live in the now then preparing for the later. That’s why I’m so thankful for my husband who is planning well for out future.
A number of millennials have this mindset. They may say that the future is far out there and they have more time to prepare. Unfortunately, time really flies so fast. The next thing they know, retirement is knocking, health issues are appearing, among others.
In the end, it’s a matter of priorities and choices. And, as I see it, these differ from one generation to another:)
Absolutely right. Many times, it boils down to priorities and choices. When you prioritize what you need in life, you should always follow through with it regardless of how easy or difficult it is to accomplish.
This is true, many people are not able to save money for their retirement age. Thanks for the information and I will try to improve.
Thank you for reading. Yes I agree that there are a lot of people who aren’t able to save money for retirement. I have seen quite a few people who are going through difficult times because they want to retire but they don’t have sufficient money to allow them to retire comfortably.
i totally agree here.. i also blog articles like this.. i would really love reading articles from yur blog..
Thanks.
Yes, to save for retirement is a good thing to do in order to have a good life after. Like with my father, he is a retired public school teacher, and he really enjoy the money he saves.
Yes. I say that it’s always important to prepare for retirement. It’s in your best interest to save now so you’ll have more money later on.
Interesting points. I am not sure how it is in the States, but more and more Canadians are putting off their retirement to either fund for their kids college education (because tuition has gone up so high and/or they did not save enough from when they were younger) and there are also alot of parents in Canada taking in their kids after an expensive degree and no job after post-secondary. many parents wanted to downsize to a smaller place once their kids moved away from school (thinking that they will find a job after school and not need to return home) but could not because there child return home (for years) living with them until they find better work. i think the fact that my parents live half way around the world has completely removed this as an option for me and taught me to hustle and move cities & even provinces to get the job I want. I don’t know if I would i have as “hungry” to find work after college if my parents lived near by as I know I had much of the same difficulties my peers were facing in finding work after college. with more experience now things are getting better, but it is still tough out there.
In America, I see a lot of people putting off their retirement because of other responsibilities, which includes funding education of their children. My closest co-workers are doing just that. They are delaying their retirement because they still have children in school. They are in the mid-50s and still working. Their main reason is that of the education matter.
Allan, I am at retirement age and I can tell you that it comes sooner than people think. I encourage everyone to start planning and saving for retirement as early as you can. Very good article.
Yes, the earlier you save, the greater the chance your money will grow more. Basically, this is what my wife and I have been doing for a couple of years now. We are saving and investing wisely so we have more in the future.
Great article to read as my husband and I work on getting out of debt and save more for our future! Retirement savings got more real to me after 40…though I know it should have been important much sooner.
Hi there! This post couldn’t be written any better! Reading through this post reminds me of my previous room mate! He always kept talking about this. I will forward this article to him. Pretty sure he will have a good read. Thank you for sharing!
Hi Allan, thanks for a good article. I AM retired, although as a writer I continue to “work” but at my own pace. My husband (a retired minister who still preaches at times) and I have a small cottage 5 minutes walk from the beach. But life would be so much easier if we hadn’t dipped into our retirement funds on occasions. Fortunately, although we are not from the Philipines, we have loving family who help out at times.
Thank you.
“Retirement planning should start when you are in your late 40s or 50s”
Ideally it will start in your 20s – as soon as you get full-time employment.
I started savings and investing in my 20s and by my 40s had half a million in my retirement account. Similar for my wife. Yes, that’s right, just about a million in retirement investments by my 40s. If I had waited until my 40s to get started, I’d have been way behind.
That is correct. And I have corrected the text in that sentence. I have meant to say shouldn’t not should. Thanks.
My wife and I started saving as well in our 20s but on one income as we decided that she stay home to take care of our kid. We wish to save at least a million each by the time we get to our 40s.
Totally agree with your reasons, Allan! I think an important part of getting people to start saving for retirement early is to simplify and educate.
Retirement accounts are intimidating! I know a lot of people, especially in their 20’s, have a hard time selecting the right retirement account, and a really hard time selecting the investments in the account.