Are you ready for some outside-the-box thinking as you focus on retirement planning?  Consider the advice from this video: http://www.youtube.com/watch?v=Tq_lB7P0_o4.

We’ve all read the headlines that show that most Americans are not financially prepared to fund their own retirement.  The numbers look scary, and conjure up visions of thousands of elderly Americans sleeping on the streets covered with newspapers to keep them warm.  But the difference between being able to afford retirement and not can be surprisingly thin if you know the right levers to push.

A recent article in SmartMoney magazine illustrates the point.  It starts out by noting that the average retirement age in America is 64 for men and 62 for women.  Then it points out that if you were to extend that average worklife by just four years, you actually pull three levers at once.  You generate four years of additional income (and savings), which boosts the value of your retirement portfolio.  At the same time, you take away four years of consuming your retirement portfolio, meaning that it will have to work less hard to support you in your retirement years.  And finally, you raise the age at which you would take full Social Security benefits.  For each $1,000 you could have received at age 62, you would receive $1,760 at age 70 – and that amount is indexed to inflation, which means it retains its full purchasing power.

And if more Americans were to work additional years, they would add more to the Social Security system and release some of the its financial strains.

There are two other reasons to consider adding those four years to your worklife.  First, people today are living longer, and have the ability to contribute their skills to the global economy much longer than previous generations.  When Social Security was first conceived, the average worker lived only a year or two after collecting benefits at age 65.  Today, the life expectancy in the U.S. is 78.7 years, and today’s 65-year-old is often healthy enough to take ski trips and scuba dive – and supervise a corporate team as it takes on complex projects.

The second reason to work longer is to avoid something very serious, and never talked about: mental atrophy after leaving the workplace.  In his excellent analysis of traditional retirement–entitled “The New Retirementality” – author Mitch Anthony demolishes the notion that your golden years are best spent on the golf course.  The human mind is like human muscles; it must be exercised vigorously in order to maintain its full functionality. 

The book talks about a person who retired early meeting a colleague who “stayed in the game.”  They are both the same age, but five years on the golf course, and what Anthony describes as increased mastery of the 19th hole (the club bar) have not been kind to the early retiree, who sees in his colleague an enviable amount of vigor, connectedness, and above all meaning in his life, even as he complains semi-seriously about the increased demands of his position with the firm.  An outsider who walks up to the conversation leaves with the impression that the early retiree is at least ten years older than the person who decided to continue working for five more years.

You may not need to pull all these levers at once–indeed, we work hard to help our clients retire on their own terms.  But the next time you see dire projections about Baby Boomers living on dog food, you might take comfort knowing that there are relatively simple ways to change those numbers–and possibly improve peoples’ lives (and the Social Security system) at the same time.