This is the point where two facts collide. You hear a lot of white noise about the so-called delayed retirement, the I'll-have-to-work-longer-because-my-plan-was-undone tales. Those headlines create anxiousness amongst even those who are prepared to retire as planned. This group second-guesses the plan they have in place even if it is viable. And then you also hear the unbelievable number of retiring Boomers that do take the leap, a number that doesn't seem real: 10,000 Boomers are reaching retirement age each day.
Who are these people? The unprepared and the prepared hurtling headlong into older adulthood. They both had expectations of retiring based on what can only be considered now as unrealistic math. They set goals and they weren't met as planned. A few got it right. Remember, there's no shame in that miscalculation. Folks have been doing it for decades. But your plan is all you really care about and if it hasn't met your expectations, which in many instances were a bit lofty, you resign to work longer. This is where the facts collide.
You know all too well that simply working longer will add to the amount of retirement income you will have but only if you significantly increase your contributions. Few resign themselves to do both.
But the other half of the equation, the Boomers who do retire, are often caught in the same anxiety ridden place. They question whether they made the right choice and more importantly, whether the money they have amassed will serve their purpose, remains hanging over every plan as an unknown.
That purpose is often clouded with not only the unpredictable cost of longevity but whether they might have enough to take care of their heirs - a serious consideration among a wide swath of retired adults and those about to retire. This last consideration is entertained by women more so than men, statistics have uncovered, which is often surprising. Why? This same group of women approaching retirement has often saved less, another unfortunate statistic concerning women and retirement.
Those that do retire should consider where they retire. And while there are many suggestions as to what to do and how to go about it, but a quick survey of your current surroundings will offer a great many answers to your dilemma.
For instance, seniors or those about to become seniors often fail to inventory the services they may need. Once retired, your daily life will require things you had previously not considered. More than just the availability of medical services, more than the infrastructure of city services such as public transportation and well-lit and well-patrolled neighborhoods, your current location needs to stimulate you or at least have accessible stimulation to keep you mentally sharp and involved. This is not how many American cities were designed. Far too many cities and their suburbs require a car. And while this may be seen by many older Americans as a freedom, not being able to drive can imprison some seniors if they find where they live too far away from these activities. Only vast sums of retirement income can change that one item and few seniors, who essentially are on a fixed income, want to reach for their wallet or purse to pay to go shopping.
To pre-Boomers or those who are still working, where you live is not often what you can afford. If you live in the city, chances are you rent. If you live in the suburbs, chances are you have a mortgage. If you have a mortgage, chances are you can't afford it. That's a lot of "ifs" but they are an approaching nightmare for those about to retire.
While many of believe that the cities we live in should adjust to us and our current and future retirement needs, it probably won't happen soon. So retirees look to communities that cater to their needs. This ghetto-izing of seniors, much like Florida and Arizona is not only unappealing to many Boomers, it is not as healthy as it first appears. Sure, these senior-only communities do provide like-minded companionship, concentrated services and accommodations that cater to gradual aging, but they are often culturally void of the stimulation that all walks of life can provide. Being isolated is not the answer.
So what is? Cities are struggling with their finances and as a result are cutting back on services that once were taken for granted. We might be living longer but in far too many instances, your health may compromise that statistic or impact the quality of that longer life. And the cost of where you live - assuming your mortgage is paid off before you retire - is not getting cheaper. Add inflation into the mix and you have eliminated all but the most obvious choice: you have fewer options.
Of course, you can stay put in a house that might be too big and too costly to maintain. This will gradually eat away at your fixed income and reduce your opportunities to engage with the outside world. Now one plans on spending their day at McDonalds sipping bad coffee with fellow seniors, no matter how well-lit, no matter how inexpensive the house brew and no matter if the loitering rules don't apply. But take away any portion of that spendable income and you limit the choices.
Where is the right place? While there is no firm answer, you do have options. For instance, if family is important to you, be sure your family shares this thinking as well. The dynamic of marriage - and I am speaking of your children's marriage - can create some confusion. Deciding that you can rely on your children and their spouses for the help you might need is something you need to discuss well in advance of retiring.
At some point, one of your kids or their spouses may find you in their care. Perhaps not in the day-to-day sense or even the long-term care situation, but in the need to check-in, help with errands or assume a financial role. This needs to be discussed in advance, a discussion that should be instigated by you. This is no easy discussion.
You do need to tell your children what you expect from retirement, even if you are unsure. Answer the hard questions (can you afford to stay in your house for instance) and when the time comes, unfold your finances for them to see. Let them know where you stand and what your plan is.
Boomers will be sold a retirement that is unlike any other before them. If you live longer as the statistics suggest you will, what do you expect of your surroundings? What role does your community play in the decision? What role will your kids have? Retirement is much more than simply amassing cash. It is amassing support. And believe it or not, that is old school thinking, a throwback to the time when retired family members depended on their kids for everything. But those kids, who may not be thinking along the same lines as you need to be involved now, rather than later.
Paul Petillo is the Managing Editor of BlueCollarDollar.com/Target2025.com and a fellow Boomer
Showing posts with label stay working. Show all posts
Showing posts with label stay working. Show all posts
Sunday, February 26, 2012
Thursday, December 16, 2010
Boomer Women may Want to Work Longer: But will they be Allowed?
Boomer women, faced with lesser time in the workforce are increasingly looking at the option of working longer. The question is: will their employer see this as beneficial? And if they do, how far are they willing to go to permit this extended work career?
We know two things in this post or almost post-recession era we are currently in: One, older workers are returning to work or not leaving the workforce at all and two, younger workers who traditionally made up the bulk of the workforce, are being crowded out by this newer pool of older workers. Delaying retirement due to economic concerns that have stymied our financial well-being has been news for quite some time. But what if the new face of the workforce is slightly wrinkled and framed in grey?
According to a study conducted by WorkplaceFlexibility.org and authored by Richard W. Johnson, Senior Fellow at The Urban Institute: "As the U.S. population ages and the number of Americans reaching traditional retirement ages increases, employers may need to attract and retain more older workers, many of whom are highly experienced, knowledgeable, and skilled." Basing the study on well-known assumptions, Mr. Johnson explores the shift in the workplace to accomodate the older worker who is increasingly choosing to hang on to their employment longer.
Among those assumptions is a longer life. As the older population reaches retirement age, they are finding the ability to continue working a possibility in large part because the work these folks tend to do is less physically demanding that many jobs were just a decade ago. While financial concerns are most likely to enter into the newsworthy conversations, the study seems to suggest that this trend is centered more on women than men.
The result is increased complications both for the company, the worker and the benefits they might or should be receiving at that age. The result is an experiment unlike any conducted prior to this where the lines blur between what is full-time work and what is full-time retirement.
Phased retirement, the new buzzword in this process involves reduced hours and responsibilities that include some perks normally reserved for women and men in the workplace who temporarily leave because of families. Among those phased perks are "flexible work arrangements, including part-time employment, flexible schedules, telework, contract work, and job sharing."
For the employer, the fringe benefits often accessible to the older workforce, such as traditional pensions could open the door to age discrimination. And this could hurt women more than men. Even as women have made great strides over the last several decades in pay, benefits and workplace populations, it is this group that is most likely to continue, or want to continue working beyond the traditional age of 65. Men, despite the reports of longer and healthier lives, choose to retire more now than when the jobs they engaged in were more physically demanding and strenuous.
The shift over the last three decades to defined contribution plans (401(k)s, 403(b)s) are much more accommodating to this segment of the workforce that wants to work longer. They can continue to contribute to a DC plan long after the traditional pension retirement age has been reached, adding the potential for greater lifetime incomes in the process. Because of these types of plans, workers reaching retirement age are more likely to work at least two-three years longer than they may have previously anticipated.
The study also revealed that if the employer provides health benefits for early retirees. of which according to a 2009 study conducted by the Kaiser Foundation only 29% of the employers do, that person is more likely to retire. Take them away or not provide these benefits and the worker will stay on the job longer.
Because Social Security benefits are calculated on a 35 year work history, one that favors men who have never had any interruption in their work history, this group is more likely to take their leave from the workforce. For women, each additional year worked eliminates a zero earnings year that may have come due to family leave because of children or the need to take care of aging parents.
The question facing employers is whether to retain these workers. In most instances, the older worker is at the top of the pay scale and poses a greater cost on the health benefits provided. Mr. Johnson notes: "Another study found that employers were less likely to call back older job applicants than otherwise identical younger applicants (Lahey, 2008). And it takes laid-off workers age 50 and older much longer than younger workers to become reemployed, even though older unemployed workers appear to search just as intensively as their younger counterparts (Johnson and Mommaerts, 2010)." Even if the desire to work longer is there, the opportunities may be limited.
Employers have acknowledged that the pool of potential retirees in the coming years will have a negative impact on the skill level of their employees. Yet few have done anything to address this shortfall of talent and skill. "For example, in the Cornell survey only 26 percent of employers allowing phased retirement would provide the same health benefits to workers after they reduced their hours. About two-fifths of employers allowing phased retirement in the Cornell survey, but only 9 percent of employers in the Ernst & Young survey, would allow in-service pension benefits."
The problem will need to be addressed by Congress at some point. Women Boomers face the greatest challenge in the coming years as they attempt to make up earnings shortfalls and look to adjust their schedules to a more flexible arrangement.
Employers will also need to address the issue as well. they may say that the talent looking to retire is worth retaining. But their current policies don't suggest they are doing much in the way of providing incentives. They may say they desire the older workforce. In practice, they have yet to make substantive moves to permit this choice.
Paul Petillo is the managing editor of Target2025.com/BlueCollarDollar.com and a fellow Boomer.
We know two things in this post or almost post-recession era we are currently in: One, older workers are returning to work or not leaving the workforce at all and two, younger workers who traditionally made up the bulk of the workforce, are being crowded out by this newer pool of older workers. Delaying retirement due to economic concerns that have stymied our financial well-being has been news for quite some time. But what if the new face of the workforce is slightly wrinkled and framed in grey?
According to a study conducted by WorkplaceFlexibility.org and authored by Richard W. Johnson, Senior Fellow at The Urban Institute: "As the U.S. population ages and the number of Americans reaching traditional retirement ages increases, employers may need to attract and retain more older workers, many of whom are highly experienced, knowledgeable, and skilled." Basing the study on well-known assumptions, Mr. Johnson explores the shift in the workplace to accomodate the older worker who is increasingly choosing to hang on to their employment longer.
Among those assumptions is a longer life. As the older population reaches retirement age, they are finding the ability to continue working a possibility in large part because the work these folks tend to do is less physically demanding that many jobs were just a decade ago. While financial concerns are most likely to enter into the newsworthy conversations, the study seems to suggest that this trend is centered more on women than men.
The result is increased complications both for the company, the worker and the benefits they might or should be receiving at that age. The result is an experiment unlike any conducted prior to this where the lines blur between what is full-time work and what is full-time retirement.
Phased retirement, the new buzzword in this process involves reduced hours and responsibilities that include some perks normally reserved for women and men in the workplace who temporarily leave because of families. Among those phased perks are "flexible work arrangements, including part-time employment, flexible schedules, telework, contract work, and job sharing."
For the employer, the fringe benefits often accessible to the older workforce, such as traditional pensions could open the door to age discrimination. And this could hurt women more than men. Even as women have made great strides over the last several decades in pay, benefits and workplace populations, it is this group that is most likely to continue, or want to continue working beyond the traditional age of 65. Men, despite the reports of longer and healthier lives, choose to retire more now than when the jobs they engaged in were more physically demanding and strenuous.
Because the focus of this report is on the effects various policies and practices surrounding this transitional time of a workers life, Mr. Johnson points out some of the incentives and disincentives for working or not. Social Security has been gradually pushing back the retirement age and will probably continue to do so in the coming years. Defined benefit plans or pensions further complicate this trend by penalizing the annuitized payment should the worker continue to be employed.
The shift over the last three decades to defined contribution plans (401(k)s, 403(b)s) are much more accommodating to this segment of the workforce that wants to work longer. They can continue to contribute to a DC plan long after the traditional pension retirement age has been reached, adding the potential for greater lifetime incomes in the process. Because of these types of plans, workers reaching retirement age are more likely to work at least two-three years longer than they may have previously anticipated.
The study also revealed that if the employer provides health benefits for early retirees. of which according to a 2009 study conducted by the Kaiser Foundation only 29% of the employers do, that person is more likely to retire. Take them away or not provide these benefits and the worker will stay on the job longer.
Because Social Security benefits are calculated on a 35 year work history, one that favors men who have never had any interruption in their work history, this group is more likely to take their leave from the workforce. For women, each additional year worked eliminates a zero earnings year that may have come due to family leave because of children or the need to take care of aging parents.
The question facing employers is whether to retain these workers. In most instances, the older worker is at the top of the pay scale and poses a greater cost on the health benefits provided. Mr. Johnson notes: "Another study found that employers were less likely to call back older job applicants than otherwise identical younger applicants (Lahey, 2008). And it takes laid-off workers age 50 and older much longer than younger workers to become reemployed, even though older unemployed workers appear to search just as intensively as their younger counterparts (Johnson and Mommaerts, 2010)." Even if the desire to work longer is there, the opportunities may be limited.
Employers have acknowledged that the pool of potential retirees in the coming years will have a negative impact on the skill level of their employees. Yet few have done anything to address this shortfall of talent and skill. "For example, in the Cornell survey only 26 percent of employers allowing phased retirement would provide the same health benefits to workers after they reduced their hours. About two-fifths of employers allowing phased retirement in the Cornell survey, but only 9 percent of employers in the Ernst & Young survey, would allow in-service pension benefits."
The problem will need to be addressed by Congress at some point. Women Boomers face the greatest challenge in the coming years as they attempt to make up earnings shortfalls and look to adjust their schedules to a more flexible arrangement.
Employers will also need to address the issue as well. they may say that the talent looking to retire is worth retaining. But their current policies don't suggest they are doing much in the way of providing incentives. They may say they desire the older workforce. In practice, they have yet to make substantive moves to permit this choice.
Paul Petillo is the managing editor of Target2025.com/BlueCollarDollar.com and a fellow Boomer.
Monday, September 14, 2009
Boomers Retirement.
I have been so busy with real estate business as well as my part time consulting in IT field. I just saw that the last time I updated this blog was in March 2009.
I think may be it is in keeping with the time. Boomers Retirement is oxymoron. boomers can not afford to retire even if they reach 62 and are eligibla for Social Security. Younger boomers who are in their 50s definitely still need to work.
More boomers and seniors are putting off retirement and many work not because they want to but because they have to.
According to Paul Taylor, executive vice president of the Pew Research Center, "Four in 10 folks still working in their 60s say they will have to delay their retirement because of the recession,"
The new report also stated that during the next decade 93 percent of the growth in the U.S. labor force will be made up of people 55 and older.
Here is the link to the article:
Recession Turns a Graying Office Grayer
America’s Changing Work Force
September 3, 2009
According to the Pew Research survey, nearly four-in-ten adults who are working past the median retirement age of 62 say they have delayed their retirement because of the recession. Among workers ages 50 to 61, fully 63% say they might have to push back their expected retirement date because of current economic conditions
http://pewsocialtrends.org/pubs/742/americas-changing-work-force
I think may be it is in keeping with the time. Boomers Retirement is oxymoron. boomers can not afford to retire even if they reach 62 and are eligibla for Social Security. Younger boomers who are in their 50s definitely still need to work.
More boomers and seniors are putting off retirement and many work not because they want to but because they have to.
According to Paul Taylor, executive vice president of the Pew Research Center, "Four in 10 folks still working in their 60s say they will have to delay their retirement because of the recession,"
The new report also stated that during the next decade 93 percent of the growth in the U.S. labor force will be made up of people 55 and older.
Here is the link to the article:
Recession Turns a Graying Office Grayer
America’s Changing Work Force
September 3, 2009
According to the Pew Research survey, nearly four-in-ten adults who are working past the median retirement age of 62 say they have delayed their retirement because of the recession. Among workers ages 50 to 61, fully 63% say they might have to push back their expected retirement date because of current economic conditions
http://pewsocialtrends.org/pubs/742/americas-changing-work-force
Wednesday, May 30, 2007
Workers giving retirement the boot
Workers giving retirement the boot
By Jonathan Peterson, Times Staff Writer
May 30, 2007
Every morning, a trusty alarm in his own head wakes up John Feyk before 5. Less than an hour later, he is stepping into the white commuter van that drives him 20 miles to Aerospace Corp. in El Segundo.
He has worked there for almost half a century.
"It does get to be more of a strain getting up at 5 in the morning," said Feyk, 79. But retirement, he added, is something he has given little thought to over the years.
"I didn't decide not to retire at 65," said Feyk, a chemical engineer who lives in Rancho Palos Verdes. "You have to decide to retire."
A growing portion of the U.S. workforce seems to agree. After falling for more than 100 years, the retirement age chosen by working Americans is edging up once again, and the trend could have broad consequences for households and the economy.
In the mid-1980s, just 18% of people in their late 60s still had jobs, the Bureau of Labor Statistics said. That figure is now up to 29%, and experts believe the level will continue to rise as people confront the prospect of a lengthy and expensive old age with limited retirement benefits. More than 1 in 4 baby boomers — the huge generation born from 1946 to 1964 — plan never to retire, a recent survey by the National Assn. of Realtors shows.
Many will not achieve that goal. Health problems and workplace pressures such as cutbacks force many workers into retirement earlier than they expect. And employers that have a choice often prefer the young, viewing older workers as costly and resistant to new technologies.
Despite that, more older Americans are pulling paychecks, a shift that is increasingly noticeable among people in their late 60s.
The trend "is really quite dramatic, considering what was going on for so long before that," said Sara Rix, a strategic policy advisor at the AARP Public Policy Institute.
For many years, society made it increasingly easy to stop working. Social Security retirement benefits were repeatedly enhanced after World War II. The advent of Medicare in 1965 helped pay the medical bills. Large employers typically offered pensions that guaranteed set payments for life.
Today's workers face a more hazardous landscape. Traditional pensions are increasingly rare. Companies are cutting back retiree healthcare benefits.
Even the bulwark of Social Security is quietly retrenching. The traditional age of 65 to qualify for full retirement benefits is gradually moving upward — workers born in 1960 and after will have to wait until they are 67 to get their full amount. In the coming years, more Social Security benefits will be subject to income tax, and higher premiums for Medicare Part B (which covers certain medical services) will further erode benefits.
These growing financial pressures may hit baby boomers particularly hard. As much as 80% of this group expects to work during what would normally be their retirement years, according to polling by AARP. Meanwhile, legal barriers to work for older people are largely a thing of the past. In 1986, the government outlawed mandatory retirement for most jobs.
"I'm not sure when I would want to retire at this point," said Claudine Welsh, 60, a Corona resident who works for a benefits administrator. She is thinking about taking on a second job and expects to work for at least seven more years. "Basically, it's because of money."
Welsh, who is single, has no private pension, and her 401(k) balance is $10,000. Home equity is key to her future economic security — she co-owns two houses with relatives. Beyond that, she views work as an important part of life and talks about one day opening up a coffee shop with her older sister.
Otherwise, "what are you going to do with all that time?" she asked.
And there could be a lot of that. For a married couple of 65-year-olds, the odds are 83.7% that at least one spouse will survive to age 85, according to the Society of Actuaries. Chances that one will live to 90 are 63%, and chances that one will reach 95 are 35.7%.
Ten years ago, the typical age of retirement for all U.S. workers was 60, according to the Employee Benefit Research Institute. Recently, it has risen to 62 overall, a shift that researchers believe may be partly tied to the increasing reliance on 401(k) plans and the decline of traditional pensions that guaranteed monthly payments for life.
The trend could potentially have a big effect on society, putting more money in the pockets of the elderly and even giving the economy a boost, as more workers continue paying income taxes in their golden years. Research by analysts at the Urban Institute suggests that if all workers added one year to their careers, it could markedly reduce the projected shortfall in Social Security.
"It's a direction we have to go in," said Alicia H. Munnell, director of the Center for Retirement Research at Boston College. "You can let your 401(k) plan build up some more. You can reduce the period that you have to live off your assets."
The economy's long-term shift toward knowledge-based jobs and away from physical labor is another force that might be increasing the rolls of older workers. Already, older employees with higher levels of education seem to be playing a major role in the trend, and some say the psychological rewards rather than money are what motivate them.
"It's interesting work," said Feyk, who has worked at Aerospace Corp. for most of the last 45 years. "It's new challenges."
Feyk helps oversee classified work of contractors on military space and missile systems. "The things that we do, the projects that we look at, have never been done before." Still, it is unclear how far the trend toward working later in life will go. Society is much richer than the days when people worked almost until death, and early retirement continues to hold some of its allure.
Older employees can find themselves scrambling between different jobs, as companies rise and fall and long-term relationships between employer and employee become rarer.
When Jules Lippert's business of selling prebuilt homes went bust in the 1980s, he loaded a van with antiques and spent the next 16 years selling his wares at trade shows around the United States.
Finally wearying of the road, he tried to shift his business to EBay. A couple of years ago, he took up his neighbor's offer to train interviewers for market research.
Now 76, Lippert still works as many as 35 hours a week: "As long as I'm in good health, I see no reason to retire," said the suburban Philadelphia resident. "I would sit around and vegetate."
At the same time, money "is important," said the grandfather of seven. "My wife and I could exist on our combined Social Security plus our IRA, but it would not leave a lot of room for extras."
Employers will play a big role in deciding whether baby boomers' visions of an industrious old age turn out to be fantasy.
Some companies rely on the institutional memory and experience of longtime employees.
"We encourage people to stay with the company," Aerospace spokesman David L. Jonta said. "We have a lot of people that do, and we value that expertise."
Hospitals and other employers struggling with labor shortages are also known to court older employees by offering flexible schedules and extra leeway for time off.
Still, such companies "quite frankly are ahead of the curve," said Deborah R. Russell, director of workforce issues at AARP.
After interviewing 400 employers, researchers at Boston College recently concluded that many companies were only "lukewarm" about accommodating older workers who might be willing to stay on the job a few extra years.
Which doesn't make a lot of sense to Feyk.
"Somehow we're going to have to get people over 65 into productive work, because there aren't going to be enough of the young people to support them," he said.
He is not the only member of his family who feels that way. Feyk's wife, he noted, recently got a job as a church organist in San Pedro. "She's getting her W-2 right now," he said, adding: "She's just a young thing. She's only 75."
*
--------------------------------------------------------------------------------
jonathan.peterson@latimes.com
*
(INFOBOX BELOW)
Staying on the payroll
The trend: Americans are now typically retiring at age 62, compared with age 60 in 1997, reversing decades of decline in the retirement age.
What's behind it: As employers scale back pensions and health benefits for retirees, many people cannot afford to retire. Others simply choose to work, saying they would be bored otherwise.
The consequences: By staying in the workforce, older employees generate more spendable income — buoying the economy and contributing additional income taxes. Social Security could also be helped as workers pay into the system for additional years.
Los Angeles Times
--------------------------------------------------------------------------------
http://www.latimes.com/news/printedition/front/la-fi-retire30may30,1,4144111,full.story?ctrack=1&cset=true
By Jonathan Peterson, Times Staff Writer
May 30, 2007
Every morning, a trusty alarm in his own head wakes up John Feyk before 5. Less than an hour later, he is stepping into the white commuter van that drives him 20 miles to Aerospace Corp. in El Segundo.
He has worked there for almost half a century.
"It does get to be more of a strain getting up at 5 in the morning," said Feyk, 79. But retirement, he added, is something he has given little thought to over the years.
"I didn't decide not to retire at 65," said Feyk, a chemical engineer who lives in Rancho Palos Verdes. "You have to decide to retire."
A growing portion of the U.S. workforce seems to agree. After falling for more than 100 years, the retirement age chosen by working Americans is edging up once again, and the trend could have broad consequences for households and the economy.
In the mid-1980s, just 18% of people in their late 60s still had jobs, the Bureau of Labor Statistics said. That figure is now up to 29%, and experts believe the level will continue to rise as people confront the prospect of a lengthy and expensive old age with limited retirement benefits. More than 1 in 4 baby boomers — the huge generation born from 1946 to 1964 — plan never to retire, a recent survey by the National Assn. of Realtors shows.
Many will not achieve that goal. Health problems and workplace pressures such as cutbacks force many workers into retirement earlier than they expect. And employers that have a choice often prefer the young, viewing older workers as costly and resistant to new technologies.
Despite that, more older Americans are pulling paychecks, a shift that is increasingly noticeable among people in their late 60s.
The trend "is really quite dramatic, considering what was going on for so long before that," said Sara Rix, a strategic policy advisor at the AARP Public Policy Institute.
For many years, society made it increasingly easy to stop working. Social Security retirement benefits were repeatedly enhanced after World War II. The advent of Medicare in 1965 helped pay the medical bills. Large employers typically offered pensions that guaranteed set payments for life.
Today's workers face a more hazardous landscape. Traditional pensions are increasingly rare. Companies are cutting back retiree healthcare benefits.
Even the bulwark of Social Security is quietly retrenching. The traditional age of 65 to qualify for full retirement benefits is gradually moving upward — workers born in 1960 and after will have to wait until they are 67 to get their full amount. In the coming years, more Social Security benefits will be subject to income tax, and higher premiums for Medicare Part B (which covers certain medical services) will further erode benefits.
These growing financial pressures may hit baby boomers particularly hard. As much as 80% of this group expects to work during what would normally be their retirement years, according to polling by AARP. Meanwhile, legal barriers to work for older people are largely a thing of the past. In 1986, the government outlawed mandatory retirement for most jobs.
"I'm not sure when I would want to retire at this point," said Claudine Welsh, 60, a Corona resident who works for a benefits administrator. She is thinking about taking on a second job and expects to work for at least seven more years. "Basically, it's because of money."
Welsh, who is single, has no private pension, and her 401(k) balance is $10,000. Home equity is key to her future economic security — she co-owns two houses with relatives. Beyond that, she views work as an important part of life and talks about one day opening up a coffee shop with her older sister.
Otherwise, "what are you going to do with all that time?" she asked.
And there could be a lot of that. For a married couple of 65-year-olds, the odds are 83.7% that at least one spouse will survive to age 85, according to the Society of Actuaries. Chances that one will live to 90 are 63%, and chances that one will reach 95 are 35.7%.
Ten years ago, the typical age of retirement for all U.S. workers was 60, according to the Employee Benefit Research Institute. Recently, it has risen to 62 overall, a shift that researchers believe may be partly tied to the increasing reliance on 401(k) plans and the decline of traditional pensions that guaranteed monthly payments for life.
The trend could potentially have a big effect on society, putting more money in the pockets of the elderly and even giving the economy a boost, as more workers continue paying income taxes in their golden years. Research by analysts at the Urban Institute suggests that if all workers added one year to their careers, it could markedly reduce the projected shortfall in Social Security.
"It's a direction we have to go in," said Alicia H. Munnell, director of the Center for Retirement Research at Boston College. "You can let your 401(k) plan build up some more. You can reduce the period that you have to live off your assets."
The economy's long-term shift toward knowledge-based jobs and away from physical labor is another force that might be increasing the rolls of older workers. Already, older employees with higher levels of education seem to be playing a major role in the trend, and some say the psychological rewards rather than money are what motivate them.
"It's interesting work," said Feyk, who has worked at Aerospace Corp. for most of the last 45 years. "It's new challenges."
Feyk helps oversee classified work of contractors on military space and missile systems. "The things that we do, the projects that we look at, have never been done before." Still, it is unclear how far the trend toward working later in life will go. Society is much richer than the days when people worked almost until death, and early retirement continues to hold some of its allure.
Older employees can find themselves scrambling between different jobs, as companies rise and fall and long-term relationships between employer and employee become rarer.
When Jules Lippert's business of selling prebuilt homes went bust in the 1980s, he loaded a van with antiques and spent the next 16 years selling his wares at trade shows around the United States.
Finally wearying of the road, he tried to shift his business to EBay. A couple of years ago, he took up his neighbor's offer to train interviewers for market research.
Now 76, Lippert still works as many as 35 hours a week: "As long as I'm in good health, I see no reason to retire," said the suburban Philadelphia resident. "I would sit around and vegetate."
At the same time, money "is important," said the grandfather of seven. "My wife and I could exist on our combined Social Security plus our IRA, but it would not leave a lot of room for extras."
Employers will play a big role in deciding whether baby boomers' visions of an industrious old age turn out to be fantasy.
Some companies rely on the institutional memory and experience of longtime employees.
"We encourage people to stay with the company," Aerospace spokesman David L. Jonta said. "We have a lot of people that do, and we value that expertise."
Hospitals and other employers struggling with labor shortages are also known to court older employees by offering flexible schedules and extra leeway for time off.
Still, such companies "quite frankly are ahead of the curve," said Deborah R. Russell, director of workforce issues at AARP.
After interviewing 400 employers, researchers at Boston College recently concluded that many companies were only "lukewarm" about accommodating older workers who might be willing to stay on the job a few extra years.
Which doesn't make a lot of sense to Feyk.
"Somehow we're going to have to get people over 65 into productive work, because there aren't going to be enough of the young people to support them," he said.
He is not the only member of his family who feels that way. Feyk's wife, he noted, recently got a job as a church organist in San Pedro. "She's getting her W-2 right now," he said, adding: "She's just a young thing. She's only 75."
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jonathan.peterson@latimes.com
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(INFOBOX BELOW)
Staying on the payroll
The trend: Americans are now typically retiring at age 62, compared with age 60 in 1997, reversing decades of decline in the retirement age.
What's behind it: As employers scale back pensions and health benefits for retirees, many people cannot afford to retire. Others simply choose to work, saying they would be bored otherwise.
The consequences: By staying in the workforce, older employees generate more spendable income — buoying the economy and contributing additional income taxes. Social Security could also be helped as workers pay into the system for additional years.
Los Angeles Times
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http://www.latimes.com/news/printedition/front/la-fi-retire30may30,1,4144111,full.story?ctrack=1&cset=true
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