March 1, 2018
Future ‘Retirees’ Plan to Work
Most people used to sign up for Social Security when they were fairly young – around 62, which is the earliest age allowed. Not today: fewer than 40 percent are filing for benefits at that age.
So what else are we doing differently? Well, working in retirement is high on the list.
About one in three Americans calling themselves retired in a new AARP survey have worked or now work in part-time, seasonal and sporadic jobs or sometimes full-time.
Keeping in mind that people don’t always do what they’d planned, boomers’ expectations for work exceed what current retirees are doing. Well over half of workers over 50 plan to find some kind of work after they retire.
The seeming oxymoron – working “retirees” – plays out in various ways. State and local government workers retire as early as their 50s if they’ve worked enough years to max out their pensions. Some of these civil servants find other jobs while collecting a pension. Boomers who’ve left career jobs but lack a pension cut back to part-time work in their field or find a full- or part-time job in a new field.
Money is a major reason, with a notable exception. Some people work into their late 60s or 70s because they just enjoy it. They’re usually the most educated and frequently see their jobs as a labor of love that sustains their personal growth, professional identities, or relationships.
But the AARP survey indicates that most older workers think they’ll work because they need more income to meet essential needs, particularly medical care. Recreational expenses like travel will take the hit – hence a need to earn some mad money.
Low retirement savings now is behind many boomer workers’ worries about a future cash shortage. In the most extreme cases, three in 10 have saved less than $25,000 and described their financial condition as “fair” or “poor” in AARP’s survey.
Savings increase as incomes rise, and the typical older worker with a 401(k) is somewhat better off, though not in great shape, having saved about $135,000 in 401(k)s and IRAs combined. That works out to around $600 in monthly retirement income.
AARP’s findings jibe with formal research estimating future retirement income, which shows that about 44 percent of the youngest boomers – workers in their 50s – risk not having enough.
Planning is not boomers’ strong point either. Half or fewer are analyzing how much total income they can expect as retirees, how much they should be saving, or how much their medical expenses will be. One thing they do spend time on is looking up their future Social Security statements, which are easily found online.
A paltry 14 percent of baby boomers have put together a formal financial review for retirement.
Better get to work!
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