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Develop a work-life plan B

By Jennie L. Phipps · Bankrate.com
Monday, August 27, 2012
Posted: 5 pm ET

One of the best ways to ensure that your retirement planning works is to develop a plan B -- a second path to retirement security when the first one doesn't work out the way you hoped it would.

A recent study of people in their 60s with highly physically demanding jobs makes the wisdom of that approach especially clear.

The study by the Center for Retirement Research at Boston College finds:

  • Workers whose jobs are very physically demanding are likely to retire early whether they can afford it or not, even if they are healthy and there would be a financial incentive to work longer.
  • Workers who have very demanding jobs who are able to participate fully in a 401(k) retire earliest. They hang up their work boots earlier than those who who either don't have such a plan or have an old-fashioned defined benefit pension and don't choose to take advantage of a 401(k).
  • Workers who once had physically demanding jobs, but due to injury or other health issues, could no longer do them and who are able to transition to positions that aren't so physically demanding, stay on the job much longer.

One of the first suggestions given for curing any Social Security shortfall is delaying benefits, despite the fact that research like this suggests that doing so would make life more difficult for people with physically demanding jobs -- people who need Social Security the most. Nevertheless, pushing back the age of eligibility for Social Security is clearly a likely scenario.

If you are years away from retirement, what do you do to protect yourself? The study offers suggestions:

  • If you're young and employed doing physically demanding work, start figuring out how to transition to a job that you could do later in life -- one that continues to provide a decent paycheck, but doesn't require extensive physical labor.
  • No matter what your job, save all the money you can -- even if all you can do is scoop up the quarters in the couch cushions. A healthy 401(k) buys the freedom to quit when you can no longer work -- or you're just sick of it.
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