Updated: 4/23/2013 7:00 AM ET|
Best retirement plan: Work longer
The economy, and the future of Social Security, has many seniors staying on the job past their retirement age.
Today, of course, employers are in the driver's seat when it comes to finding a job. Millions of people have been out of work for a long period of time. For older workers in particular, it's especially tough to find a new job. There will come a day, however, when the equation shifts. As this happens, employers will find older employees grateful for the chance to work. Seniors who find themselves in demand will also be looking for different types of job opportunities, including seasonal, "on-again-off-again" jobs and those that offer telecommuting and flexible hours.
What won't change is the widespread thinking that working past the traditional retirement age is not a choice but a necessity. If anything, the trend will become stronger, due to the slowness of the recovery and the growing prospect for deficit cuts that include a haircut for senior government benefits.
"Delaying retirement is often viewed as the surest route to financial security in old age," according to the Urban Institute, a Washington think tank. "By working longer and earning more, older workers can accumulate additional Social Security, boost savings, and shrink the period their retirement savings must fund. Employment at older ages also expands the nation's labor pool, accelerating productivity, increasing national income, and raising living standards for both workers and retirees."
A report on retirement trends by the TIAA-CREF Institute includes a dramatic example of how continuing to work can help people defer taking Social Security and thus raise their benefits. "A median-income couple, needing approximately $47,000 (all in 2004 dollars) in annual after-tax income, has a gap of about $27,000 if Social Security is claimed at age 62, $19,000 at age 66 and less than $9,000 if claimed at age 70," the report calculated. "The assets needed at age 62 to fill these income gaps at retirement drop from over $500,000 (for retirement at age 62) to less than $250,000 (for retirement at age 66) to only about $50,000 (for retirement at age 70)."
Older workers are not all in the same boat. Some with jobs have simply continued to work throughout the recession and recovery to date, helping to drive up their share of the employed population to record highs. According to an Institute research project and other groups, employees age 50 and older have been able to hang onto their jobs better than younger workers, often because they have more job seniority and experience.
Workers older than 50 who have lost their jobs have followed other paths. Many who have not been able to find work again decided to take Social Security as soon as they could, at age 62. This has provided them current income but is likely to worsen their long-term retirement prospects. That's because Social Security benefits rise by about 8% annually for each year benefits are deferred from ages 62 to 70. And older job seekers who have found new jobs have often taken big pay cuts.
Accepting a big pay cut, of course, is preferable to not finding work. And that's been the fate of many seniors. "Older workers are less likely to be laid off than younger workers, but when they do lose their jobs, they find it much more difficult to find work," says Richard Johnson, an Institute expert on senior issues.
The Sloan Center on Aging & Work at Boston College, another think tank, has analyzed the ways unemployed workers of all ages have tried to find new jobs. It did not report correlations between specific job-finding methods and success in finding new jobs. But the study identified differences between the job-search tools used by older and younger job seekers.
Older people tended to rely more on newspaper classified ads than younger people, who were more likely to use social networking tools to find new work. Both groups showed similar tendencies in using the Internet, word of mouth, contacts with friends and family, the use of online job boards, and attendance at job fairs.
The biggest difference, the center found, is that younger job seekers were much more likely to go back to school and pick up both job-hunting tips and also enhance their job skills. Nearly 40% of people younger than 55 did one of these two things, it reported, while only 25% of those older than 55 did so. Also, older people were less likely to tap their former employers to find a new job.
"Many older workers said they felt personally hurt and even betrayed by their former employer, especially if they worked in their previous job for a long time," the Sloan study said. "This may account for why fewer older workers are using prior employers as a resource for job hunting than younger workers report doing. The propensity to rely on newspapers ads and company job boards, as opposed to social networking sites, may also contribute to a sense of isolation and leave older workers disconnected from the workforce."
The difficulty that older job seekers have had in finding new positions raises questions about employer attitudes toward employing or reemploying older persons. After making it so difficult on older job applicants, how will employers cope if tight labor markets reappear and they must seek older employees? Such a scenario is, in fact, widely forecast.
According to Sloan, workers 55 and older comprised 19% of the American workforce in 2009, up from 12% in 1999. Looking to 2019, they would total 25% of the workforce if past trends continue. The Urban Institute takes a slightly younger cut and says workers 50 years and older will account for 35% of the labor force by 2019.
As the economy improves and labor market tightens, lots of older employees will be receiving pensions and Social Security but will still have an income gap they would like to close with employment earnings. Such "partial" or "soft" retirement-job needs will be common. Seniors in this situation will not want or value 40-hour workweeks and lots of job stress. They will, however, be seeking flexible working hours and locations, and could represent the emergence of a new kind of "piece rate" workforce.
Right now, employers don't have the need and are unlikely to accommodate such demands. But as the labor market tightens, seniors will have more clout in gaining the types of jobs that work for their financial and lifestyle preferences.
To reach such a future, most labor market experts say the government and private employers will need to develop more effective and larger-scale training programs for older people. Social Security's early retirement benefits may also need to be reexamined.
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That's all fine and dandy if your occupation allows you to physically continue. I don't see to many 70 year old roofers, assembly line workers, or airline pilots. What a joke! Anybody who actually does any manual labor, or has a job that requires keen hand-eye coordination and rapid reflexes is lucky to make it to 62 let alone 70.
I am sick and tired of seeing article after article telling me to work longer, while seeing everyone in line at the grocery store using food stamps except me.
How about we kick the low life s****ers of the dole (you know the ones that have never had a job, not the people who hit a rough patch and need temporary help) and stop sending money to foreign countries that hate us, and let us working folks keep those wasted tax dollars.
Maybe then the headlines will read "How does one spend all his money in retirement?", or "The disadvantages of working past 55!"
I just love how these Financial Writers all think that it will be so simple to "just work longer". The government in no better. Whiling working longer may sound so simple it has many consequences that they are not thinking about.
Most people who retire at age 65 have about 10 good retirement years. At age 75 -80 many people begin to experience health issues that limit their quality of life. So working until age 70 cuts my good retirement years and makes the years between ages 65 and 70 less enjoyable.
After a lifetime of working hard and giving up time with my wife and kids, I think the system owes us more than "work until you die".
Mr. Moeller, get a real job, work at it for 40 years and then tell us how you feel about retirement.
What a load of crap! Get out as soon as you can and live on what you have.
FYI we cannot get jobs at McDonalds any more as the hispanic families have taken over. When was the last time you pulled into a line and could understand the person on the other end of the intercom???? Also the politicians thought and still think SS is for their personal use!!!! I mean why work for we the people?????? They consider us sheep to do as they say not as they do.
I am a disabled vet and was also a roofer for over 35 yrs, I could not longer get on a roof to estimate it or carry a ladder. So yeah they want me to continnue to pay for the illegals.
Soon we'll read an article titled, "Work till you die, the new retirement plan". If you don't have a plan to get to retirement, then you will have to work till you die.
Happy we are financially able to walk away from jobs...Applaud whenever anyone joins our ranks.
Thank God for good decisions, wise investments and hard work... It paid off....
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