By Joel Dresang
Work as long as you want. Work as much as you can. Just don’t count on working forever.
With better health, less strenuous jobs and more flexible work environments, more people are working beyond age 65. In the last five years, while employment for Americans 64 and younger has declined, it has grown for those 65 and up, according to the Bureau of Labor Statistics.
Part of the trend is that more people can and want to work longer. But many also delay retirement because they have to.
With fewer defined-benefit pensions, workers are on their own more for providing for their retirements – saving early, saving regularly, investing prudently. Failing at any one of those could leave a worker inadequately funded for retirement.
Heap onto that the setbacks from the Great Recession and the 2008 financial collapse, later eligibility for full Social Security benefits, plus escalating costs for healthcare, and you can see why more people have to delay retirement.
According to the Center for Retirement Research at Boston College, 51% of American households are at risk of retiring at 65 unable to maintain their standard of living.
“Many people are afraid they haven’t saved enough for retirement. They’re wondering if they have to work until they die to make ends meet,” said Marc Amateis, vice president at Landaas & Company.
A new report from the center found that although barely half of households could afford to retire at 65, more than 85% could do so by 70.
“A lot of people will have to work beyond the ‘retirement age’ of 65, but it’s not as dire as a lot of people might think,” Marc said. “It’s not like everybody is going to have to work until they’re 70 to be able to retire. And quite honestly nowadays people’s vision of retirement is very different from what their parents’ vision was. They might want to stay working part-time because they love what they do or they want to keep busy.”
Art Rothschild, vice president at Landaas & Company, said he works with plenty of clients who can afford to retire but choose not to.
“They keep working not because they have to work but because they want to work,” Art said. “If you can get paid for something you love doing, why not keep doing it?”
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Plenty of benefits come from working longer, including added years of income for retirement, postponed drawdowns of savings and delayed tapping of Social Security benefits.
But not everyone has the choice of when they quit working. Nearly half of all the current retirees interviewed for the 2012 Retirement Confidence Survey, from the Employee Benefit Research Institute, said they left work sooner than they had planned because of circumstances beyond their control such as job loss or health conditions.
You’d rather have later retirement be an option – not a necessity. That’s where planning and discipline come in.
“With respect to retirement, I try to tell clients to focus on those things that they have absolute control over,” said Steve Giles, vice president at Landaas & Company. The prime factor, he said, is saving.
“Whether you start earlier or save longer by delaying your retirement, that’s going to have a huge impact on your retirement savings because of the compounding interest,” Steve said. “The earlier you start, obviously, the better. And the longer you delay retirement also is going to be that much better.”
Joel Dresang is vice president at Landaas & Company.
initially posted July 26, 2012