How to Save Enough to Retire After a 60-Year Career
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For decades, we work, work, work, hoping to make enough money to live comfortably, pay the bills, and save up for the day when we can finally clock out. But saving money for your big life plans is far from straightforward, especially for anyone working past age 65. I mean, I've had it on my mind since I started putting money away. The year was 1994. Ace of Base was number one on the charts. The Lion King took the movie box office by storm. And everyone was wondering if Ross and Rachel would end up together on Friends. I just landed my first full-time job in corporate America. I was making $27,000 a year, pretty decent money for a 20-something back then. And that's when I started putting some of it away for retirement.
I was fortunate enough to put aside 6% of every paycheck, and the company matched two-thirds of that. In all, I'm on a path toward a 40-year career. And if you're doing some quick mental math right now and thinking, yeah, 40 years sounds about right, good luck. Because today we're talking about how to prepare financially for the very real possibility that today's young workers will be working and saving for 20 more years than that.
So much depends on things that are hard to predict. You know, how long are you going to live and where are you going to live?
From a financial perspective, think about that saving and having that compounding work for you so that it lasts into your longer years.
This is a special edition of Your Money Briefing for Wednesday, September 20th. I'm J.R. Whelan for The Wall Street Journal. Welcome to the second installment in our special series on the 60-year career. Last week, we discussed how a longer life expectancy and changing ideas about work-life balance are contributing to the expectation that many people, especially those just starting their careers, may be working longer than ever before.
What is a 60-year career and why does it matter for young workers?
It might be actually very likely that a lot of people in their 20s today will live well into their 90s.
That's a lot more years on the job, commuting, answering to a boss, and a lot of saving up for your life goals. Now, there may be alternate paths. We'll get to that later. But for many of us, the big question is how to know when, at least according to your bank account, you can drop out of the rat race. We'll hear from Surya Kalluri, head of the TIAA Institute, and WSJ retirement reporter Anne Turgason about that, after the break.
This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. Listen at schwab.com slash washingtonwise.
For ages, a typical career timeline has looked like this. You join the workforce in your 20s, work for 40 years, and retire at about 65. But if you're younger than, say, 30, odds are you'll be living a longer, healthier life. And what you thought would be a 40-year career, or maybe even less, could wind up being a 60-year career. So what does that extra longevity mean financially for people who might not be retiring until their 80s or even 90s? You might think living longer and working longer means you'll have an extra few years of income, even more time to save. Problem solved, right? Well, it's complicated. It's actually to your benefit if you start saving early, even if you'll have an extra long career.
I spoke with WSJ retirement reporter Ann Tergesen about this.
The sooner you start saving, the better.
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