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Pretirement: What Is It and Why Should You Care?

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Pretirement is a term being proposed to describe a phase of life between career and retirement. Pretirement is a process that takes place over years, even decades, versus a single decision to retire. It is characterized by cutting back on work earlier in life, but continuing some work indefinitely.

Why do we need this new word? What’s wrong with the current paradigm?

The standard path through life is well known. We dedicate the first couple decades of life to education. The majority of our adult years are devoted to our careers. We then retire in our golden years.

We all know the game, but few play it well. A study by the Economic Policy Institute shows the median retirement savings for those approaching traditional retirement age is about $17,000. Most people are ill prepared financially for retirement.

A small but growing FIRE (Financially Independent, Retire Early) movement figured out how to beat the game.

Simple math shows you can live below your means and build wealth quickly. The relative frugality that allows saving a large percentage of income simultaneously leads to a lower-cost lifestyle. The savings can sustain that lifestyle indefinitely.

However, many who are financially able to retire early don’t retire by the standard definition —  leaving the workforce completely. Many of us realize a life without meaningful work is the wrong goal.

A new paradigm is necessary to address the fact that our current way of planning for retirement may not be working at either end of the spectrum. We need to look at how we got where we are, what a new “pretirement” phase of life means and planning implications of a new paradigm.
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