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The Better Alternative to Working Till You Die

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The long series of financial setbacks that millions of people have suffered through for more than a decade now has taken its toll on investor confidence. Now, those setbacks are starting to show up in the decisions that workers are making about when to retire -- and for many, the news is worse than ever before.

But unless you think you'll like what you do for an extra 15 years beyond when many people hang it up and retire, you can take steps now to avoid the fate of many less fortunate workers. I'll give you more details on exactly how to do that later in the article, but first, let's take a look at just how dire the situation is for many people right now.

I'll sleep when I'm dead
A recent retirement survey from Wells Fargo looked at what 1,500 middle-class Americans expect from their golden years. Ranging in age from 20 to 80, survey respondents represented a broad cross-section of the overall population. Among the disturbing results of the survey were the following:

  • Although the typical worker had a fairly reasonable retirement savings goal of about $350,000, half of all respondents had saved $25,000 or less toward their retirement. Put another way, the typical person fell 93% short of meeting their financial goals. Even if you only look at people in their 60s, the situation didn't get much better: 30% still had less than $25,000 saved up.
  • As a result, fully three-quarters of those surveyed expect to work throughout their retirement. A quarter believe that they'll need to put off retiring until age 80 in order to feel comfortable that their savings will be enough to get them through their golden years.
  • Uncertainty about Social Security, pensions, and Medicare are also contributing to concerns among workers about the viability of retiring at a reasonable age. A quarter of those in their 20s or 30s expect to get nothing at all from Social Security.

Before you conclude that there's no hope, it's important to point out that many people actually expect to want to work in retirement. But there's a huge difference between working because you want to and working because you have to -- and it can have a big impact on how much you enjoy what you do.

Take back your retirement
But whether you're just starting your career or pondering whether to add another 15 years to your working life before you retire, there are some things you can do to stack the deck more in your favor. Getting rid of high-interest debt will let you avoid getting dragged back down into a downward money spiral. Cutting expenses and doing what you can to save more will also go a long way toward helping your long-term prospects.

But what many people don't focus on is getting the most from their savings. Money in a savings account earning 0.1% isn't going to help you reach your retirement goals. You need investments like these:

Of course, this strategy doesn't guarantee that you'll have the retirement of your dreams. But smarter investments will help you take your savings as far as it can go.

The path to quitting
Working until 80 will make some people perfectly happy. But don't leave yourself in a position where you have no choice in the matter. It's not easy to save more, but investing better is something we can all strive for.

Get some more tips for making the most of your finances in our newest free special report, where we reveal "The Shocking Can't-Miss Truth About Your Retirement."

Fool contributor Dan Caplinger doesn't want to work until he's 80. You can follow him on Twitter here. He doesn't own shares of the stocks mentioned in this article. The Motley Fool owns shares of Intel, 3-D Systems, and Altria Group, as well as having bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Kimberly-Clark and Intel, as well as creating a bull call spread position in Intel and a synthetic long position in Monsanto. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy never quits on you.

Read/Post Comments (4) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 17, 2011, at 11:05 AM, jpanspac wrote:

    All these articles that talk about working during retirement drive me crazy. If you have to work, you haven't retired.

  • Report this Comment On November 17, 2011, at 1:15 PM, Indiscr33t wrote:

    The Better Alternative to Working Till You Die: Dying

  • Report this Comment On February 20, 2012, at 6:45 PM, akakroke wrote:

    Dan,

    Any thoughts on:

    VYM vs VIG

    akakroke

  • Report this Comment On February 20, 2012, at 7:18 PM, promommyfool wrote:

    someone needs to comment on this and help me out. As I understand it bonds are pretty much worthless right now and I've been told by people that ought to know, money people, that annuities are about the worst investment to be had. Maybe a step up or down from a general savings account, which is close to putting your money in a jar in the the yard at present.

    I'm investing in dividend stocks at present seeing no decent alternatives.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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