March 24, 2020
If People Can Work Longer, They Will
A majority of adults believe there’s better than a 50-50 chance they will still be working full-time after age 65, a new study found.
The evidence suggests this goal is fairly realistic.
In the study, adults ranging in age from 18 to 70 were asked to rate themselves on a 1-to-7 scale for 52 different cognitive, physical, psychomotor, and sensory abilities that determine their capacity to work. These abilities run the gamut from written comprehension, pattern recognition, and originality to finger dexterity, reaction time, and vision acuity.
Of course, physical abilities decline with age. But when the researchers compared older and younger participants in the study, they found that many self-assessments of their abilities were very similar. For example, psychomotor abilities – such as hand steadiness, manual dexterity, and coordination – were at peak levels for the people in their 30s. But these abilities were only slightly diminished for the people in their 60s. And despite concerns about cognitive decline among older workers, the difference between 50- and 60-year-olds was minor.
The heart of the research, funded by the U.S. Social Security Administration, was determining whether each individual’s distinct set of abilities affected his or her work capacity, as well as how long and how much the individual intends to work as they age. This issue is important, because extending a career is a powerful way to improve one’s financial security after retirement.
To determine this capacity for work, each individual’s self-assessed abilities were matched up with the skills required to do nearly 800 different U.S. occupations. The researchers then calculated the percentage of these occupations each person would be able to do, given their education and training level.
Here are three of the central findings:
The more occupations people can do, the more likely they were to say they would work past 65.
Workers over 60 with a higher capacity to work said they would be more likely to remain employed even after 70.
One in four of the retirees with a very high capacity for work would consider “unretiring” and returning to the labor force. …Learn More
March 3, 2020
Pre-Retirement Debt is Rising Over Time
Baby boomers have a lot more debt than their parents did.
By all accounts, the parents were in pretty good shape for retirement because they held their debt levels down to a mere 4 percent of their total assets in the years immediately before retiring – ages 56 to 61 – according to a new study.
At those same ages, the typical baby boomers’ debt has ranged from 19 percent to 23 percent of their assets, thanks in large part to the 2008 drop in stock portfolios and in the housing market.
Generational trends in debt levels are difficult to analyze, and the issue is far from settled among researchers. This study notes, for example, that the situation might not be as grim as the rising debt indicates.
The broad numbers hide the positive step boomers have taken – just as earlier generations did – to reduce their debt as they moved through their 50s. And although the younger boomers have fewer assets than older boomers had at that stage of life, the younger boomers are also working to improve their finances by paying down their mortgages at an accelerated pace.
But the analysis also uncovered another troubling trend for the baby boomers born in the middle of the demographic wave: about 10 percent of them had more debt during their late 50s than their assets were worth. When their parents were that age, some of the most indebted of them still had more assets than debts.
In his study, Jason Fichtner of Johns Hopkins University compared debt-to-asset ratios for five different age groups, starting with the boomers’ parents, who were born during the Great Depression, and running through the people who were born toward the tail end of the baby boom. The chart above is a financial snapshot of rising debt-to-asset ratios for each group when they were between ages 56 and 61. …Learn More
February 20, 2020
Mapping Out a Fulfilling Retirement
One might say that baby boomers on the cusp of retiring come in two varieties. Some cannot wait to retire and already have a plan. For others, the unknowns fill them with dread.
How will I occupy my days? Should I do something meaningful, or is the goal just to have fun? And how do I figure this out? At 62, this writer really has no idea.
For the other boomers who are feeling this way, take some comfort in knowing you are in good company.
“I can’t say this strongly enough. There are some people who seem to literally not think about what their retirement might look like before they retire,” says Harvard Business School professor Teresa Amabile, whose research team interviewed 83 professionals in their pre- or post-retirement years (or both) to study how they navigate the transition years.
A big part of retiring is letting go of what can be a strong identification with work, and people are reluctant to give that up, she said. This identity might be attached to one’s profession – doctor, professor, carpenter – or to an employer, a specific experiment, or the team on your current project. For others, identity is tied to being the family breadwinner. For many people entering retirement, the basis of that identity is “profoundly shaken,” Amabile said.
Of course, not everyone confronts an identity crisis. Older people who are eager to start a new chapter of their life or are simply burned out by work may find that it’s liberating to shed that old identity and move on.
But, according to Amabile, a more arduous process is common. Many older workers begin to realize, “My identity as a person and my work are really bound up together, so I need to work through that.” A crucial part of planning for retirement is determining “what life is going to be like without work, because work structures your life,” she said.
Amabile described the problems one couple in the study encountered because they didn’t have a solid plan. After retiring, they moved out of the community they’d lived in for 25 years and relocated near some family members. But two years later, they still hadn’t settled comfortably into their new life and “felt at loose ends all the time,” she said.
To prevent this from happening to you, consider that boomers typically must go through four tasks as they transition to a satisfying retirement; Amabile and her team members – Lotte Bailyn, Douglas Hall, Kathy Kram, Marcy Crary, and Jeff Steiner – saw these four tasks in many of their interviews with baby boomers.
The tasks – described below and in a follow-up blog – don’t have to happen in any particular order, though the most common sequence is: Decide to retire. Detach from work. Explore a new life structure. Consolidate a new life structure. …Learn More
February 6, 2020
Can’t Afford to Retire? Not All Your Fault
Three out of four members of Generation X wish they could turn back the clock and get another shot at planning for retirement. One in three baby boomers say don’t think they’ll ever be able to retire.
“Overwhelmingly, Americans are stressed about their current – and future – financial situation,” the National Association of Personal Financial Advisors said about these new survey results.
Regrets about not planning and saving enough are enmeshed in our thinking about retirement. But it is really all your fault that you’re not getting it done?
The honest answer to that question is “no.” There are big gaps in the U.S. retirement system that make it very difficult for many to carry the responsibility it places on workers’ shoulders.
I predict some of our readers will send a comment into this blog saying, “I worked hard and planned and am comfortable about my retirement. Why can’t you?”
Granted, we should all strive to do as much as possible to prepare for old age, and many people have made enormous sacrifices in preparation for retiring. The hard truth is that some people are much better-positioned than others. Obvious examples include a public employee with a pension waiting for him at the end of his career, or a well-paid biotechnology worker with an employer that contributes 10 percent of every paycheck to her retirement savings account. These workers frequently also have employer-sponsored health insurance, which limits their out-of-pocket spending on medical care. This leaves more money for retirement saving than someone who pays their entire premium and has a $5,000 deductible.
Sure, we could all do a better job of planning out our careers when we’re first starting out. But my husband, as a Boston public school teacher, started accruing pension credits before he could’ve imagined ever getting old. He recently retired, and his pension, accumulated during 27 years of teaching, is making our life a lot easier.
But pensions are on the wane in the private sector, and more than half of U.S. workers have neither a pension nor a 401(k) in their current job – this makes it pretty hard to save. IRAs are an option available to anyone, but human inertia makes that an imperfect solution to the problem, because people tend to procrastinate and don’t set them up. Further, working couples in which only one spouse has a 401(k) aren’t saving enough for both of them, one analysis found. …Learn More
January 28, 2020
Education Could Shield Workers from AI
Not so long ago, computers were incapable of driving a car or translating a traveler’s question from English to Hindi.
Artificial intelligence changed all that.
Computers have advanced beyond the routine work they do so efficiently on assembly lines and in financial company back offices. Today, major advances in artificial intelligence, namely machine learning, have opened up a new pathway to expanding the tasks computers can do – and, potentially, the number of workers who may lose their jobs to progress over the next 20 years.
Machine learning works this way. A computer used to identify a cat by following explicit instructions telling it a cat has pointy ears, fur, and whiskers. Now, a computer can rapidly analyze and synthesize vast amounts of data to recognize a cat, based on millions of images labeled “cat” and “not-cat.” Eventually, the machine “learns” to see a cat.
But is this technological leap fundamentally different than past advances in terms of what it will mean for workers? And what about older workers, who arguably are more vulnerable to progress, because they have less time to see the payoff from updating their outmoded skills?
The answer, according to a third and final report in a series on technology’s impact on the labor market, is that advances in machine learning are likely to affect all workers – regardless of age – in the same way that computers have over the past 40 years.
And the dividing line, according to the Center for Retirement Research, will not be age. The dividing line will continue to be education: job options are expected to narrow for workers lacking a college degree or other specialized training, while jobs requiring these credentials will expand. …Learn More
January 21, 2020
Denied Disability, Yet Unemployed
Most people have already left their jobs before applying for federal disability benefits. The problem for older people is that when they are denied benefits, only a small minority of them ever return to work.
Applicants to Social Security’s disability program who quit working do so for a combination of reasons. They are already finding it difficult to do their jobs, and leaving bolsters their case. However, when older people are denied benefits after the lengthy application process, it’s very challenging to return to the labor force, where ageism and outdated skills further complicate a disabled person’s job search.
A new study looked at 805 applicants – average age 59 – who cleared step 1 of Social Security’s 5-step evaluation process: they had worked long enough to be eligible for benefits under the disability program’s rules. The researchers at Mathematica were particularly interested in the applicants rejected either in steps 4 and 5.
Of the initial 805 applicants, 125 did not make it past step 2, because they failed to meet the basic requirement of having a severe impairment. In step 3, 133 applicants were granted benefits relatively quickly because they have very severe medical conditions, such as advanced cancer or congestive heart failure.
The rest moved on to steps 4 and 5. Their applications required the examiners to make a judgment as to whether the person is still capable of working in two specific situations. In step 4, Social Security denies benefits if an examiner determines someone is able to perform the same kind of work he’s done in the past. In step 5, benefits are denied if someone can do a different job that is still appropriate to his age, education, and work experience.
In total, just under half of the 805 applicants in the study did not receive disability benefits. …Learn More
December 31, 2019
Boomers Want to Make Retirement Work
The articles that our readers gravitated to over the course of this year provide a window into baby boomers’ biggest concerns about retirement.
Judging by the most popular blogs of 2019, they were very interested in the critical decision of when to claim Social Security and whether the money they have saved will be enough to last into old age.
Nearly half of U.S. workers in their 50s could potentially fall short of the income they’ll need to live comfortably in retirement. So people are also reading articles about whether to extend their careers and about other ways they might fill the financial gap.
Here is a list of 10 of our most popular blogs in 2019. Please take a look!
Half of Retirees Afraid to Use Savings
How Long Will Retirement Savings Last?
The Art of Persuasion and Social Security
Social Security: the ‘Break-even’ Debate
Books: Where the Elderly Find Happiness
Second Careers Late in Life Extend Work …Learn More