9/14/2012 7:43 PM ET|
How high will the retirement age go?
Forget stepping off the employment treadmill at age 65. Lifestyle and financial factors are pushing retirement further into the future.
In June, Robert Benmosche, the chairman of the insurance giant American International Group, said an increase in the retirement age was unavoidable. What surprised many is how high he predicted the age would go.
"Retirement ages will have to move to 70, 80 years old," Benmosche told Bloomberg. "That would make pensions, medical services more affordable. They will keep people working longer and will take that burden off of the youth."
Currently, Americans are eligible for early retirement at 62, and full retirement at 66. The loss of retirement funds during the economic downturn forced many to acknowledge that they would have to work longer. But Benmosche's statement shocked many. Will people really have to work a decade or more longer than they expected to make ends meet in retirement?
The answer is yes, according to some retirement experts. A number of factors, accelerated by the Great Recession, are now forcing people to change the ways they save for and think about retirement.
"Most people didn't have enough retirement savings before the downturn. The downturn was the two-by-four hit over the head that made them realize this result," says Steve Vernon, the president of Rest-of-Life Communications, a company that helps people adjust the way they save for their post-work years.
Never completely retired?
The U.S. government has already acknowledged that the official retirement age will need to increase further than the already-revised 67 years. But doubts about the long-term solvency of Social Security linger. And the need for retirees to find funding beyond the government entitlement is making the official age obsolete anyway.
"The idea of retirement is morphing into a period of time where you work for an extended period, perhaps not making as much money or as many hours, but you still bring in money and keep going," Vernon says.
He says there are two primary reasons for the change:
- Workers don't have enough saved to meet their needs after they stop working, so they need the additional income.
- People are living longer and want to be more engaged with life.
Todd Tresidder, a financial coach and founder of FinancialMentor, calls this shifting reality the "new retirement," which calls for people to continue producing income while allowing a retirement nest egg to grow.
"We added a whole new step in life. We're going from a two-step model -- save while working and then live off the savings -- to a three-step model," Tresidder says. In the new model, "You work like a dog, save a nest egg . . . you reach some point of 'enough-ness' when you're comfortable with the amount you have saved. Then you launch an encore career. You orient it to a satisfying life. You make enough to allow your income to compound. You run this lifestyle for fulfillment. You shorten the time that you use your nest egg."
How high can it go?
But the question remains: How long will someone have to continue working to achieve a secure retirement? Unfortunately, it's impossible to answer conclusively, because it depends on individual circumstances and needs.
According to Vernon, this change will happen to all workers, not just those in lower-income brackets. Even people with healthy retirement savings likely don't have enough to maintain their lifestyle. This shift is also occurring in other industrialized nations.
"Workers in industrialized nations that have transitioned away from traditional pension plans will be forced to work longer. Examples include the U.K. and Australia," says Vernon. "Other countries with higher Social Security benefits are taking longer to transition, such as France, Spain, Italy, Greece and Sweden."
- Calculator: How much will your 401k provide?
Polls indicate that Americans are beginning to accept that these changes are coming. According to a recent Gallup survey, most Americans now believe they will have to retire at 67, up from 66 last year, 63 10 years ago, and 60 in the 1990s.
But the poll also shows that people expect the increase in the retirement age to be small. According to Vernon and Tresidder, this isn't the case: People are going to be forced to work into their 70s very soon.
Tresidder says this change does not have to be a bad thing. People can work in fields that engage them and provide personal satisfaction. Just because a person's first career was a grind doesn't mean the second one will be the same.
"People are really embracing (working later in life) because it's really about fulfillment," he says.
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I guess that our Govt has forgotten the elders in their own families----the ones who worked fought and help this country grow and then at age 65 when the hair is graying, the boobs are sagging and the bellies well----but some deserve their retirement as it has always been since inception at age 65!
raising the age above such can be described as Cruel Intentions.
Some elders limp, some have meds and diseases, some can no longer work. thus as our country grown so corrupt to take the age of retirement away from our Elders---parents and grandparents.
Maybe our Government needs to rethink some policies as the disrespect to elders is out of control. Not all elders are wealthy or even middle class anymore---they paid into their SS for years and deserve to retire at an appropriate age. EX: My parents were laborers for most of thier life, both died at 71 and 67 respectively. If their SS availability would be raised then they would not have received anything according to the plan.
This is wrong and ABUSIVE TO OUR ELDERS!!!!!!!!!!!!!
Sorry DC but your head out of the penny jar and do your job! Abuse of Seniors is not in your job description.
Getting rid of the social security ceiling will allow the social security fund to grow, and provide retirement to the baby boomers. Most people don't know that once a person reaches an annual income of $110,000 they don't have to contribute to social security. Have everyone pay on every dime of payroll income.
This article is "right on." Social Security was born same year as I was, 1935. Life expectancy for a 20 year old was less than 65, hence, less than half of 20 year-olds could be expected to ever collect. If bozos in Washington DC had simply raised "retirement" age by one year per decade, current "full benefit age" would be 72 or 73 years of age. Likewise, if politicians had retained original intent (a safety net for widows and orphans) instead of extending benefits to citizens with hangnails and aliens who sneak across our border and claim benefits for kinfolk back in their native country, the current problem would have been largely avoided. Instead, the poltroons we elected to national office and who perpetrated this crime are, for the most part, either dead, are living off the generous retirements they voted for themselves, or are current office holders with no appetite for reform. Personally, I retired at 65 and worked part-time, minimum wage jobs for another 8 years before ending my "work" career. During those 8 years, I received over $144,000 in benefits instead of contributing another $90. Do the math.
If you save for your future, pay for your home, don't drive the newest car and pay for it over 84 months, don't get 18% credit you will have paid for your retirement. SS is a scam, we've heard it for the last 20 years. Wake up and take care of yourself. Don't play the blame game, look in the mirror.
America's young should drop out ASAP and go on welfare. They will have everything they'll need in life plus enjoy their youth. Only fool's will work.
They say people are living longer. That's the overall average. Take two people, one dies at 50, the other dies at 100. The average is 75. My family longevity isn't anything like that. Due to medical advancements, there are more people living to be 100 so that's raising the average. Maybe they need to break that down more. There's many people who can't afford as much medical attention as others so they have to work just to keep any medical insurance at all. These are the people who can't afford to go to the doctor everytime they sneeze. They are also the people with the jobs and bosses that aren't so willing to give time off to go to a doctor. Consequently, they work until they have nothing left to give, there's health's declined to a point it can't be repaired and they die with less at a younger age.
If they want older retirement ages, they need to provide medical care and time to seek it to everyone. Yes, that does sound like socialism, and it is. If a family has money, they have means to get the care they need and extend their longevity. Their family average life span may be 80 or more but that's not true with the more common society. So what does it mean? It means the rich get richer and the poor get poorer. Since the rich have more time, they have time to make more money and all is peachy for the elite. The poor continue to work and now, for a longer time, with less relief then ever before.
Congress started this mess several years ago by stealing the money from social security when the baby boomers were paying into the system. Now, with no money left to cover the baby boomers, the next generation will pay for it by NOT getting to retire until we are in our 70's or 80's. The System is broken and more and more people expect the government to take care of them. There is a rude awakening coming, OUR system cannot tolerate only 1/2 the country not paying into the system.
Please read this very slowly so everyone understands, this is NOT a Republican issue, it is an American issue. "Obama Poor" hit the nail on the head!
"Doesn't surprise me. Obama cut the SS tax reducing the amount of revenues going into SS.
Then, even with all that talk about protecting SS, Obama still hasn't returned the $108 billion Congress "borrowed" from SS to pay for their pork barrel projects.
Obama has money to spend on the development of children's TV programs in third world nations like Pakistan, but can't do anything for the seniors of this country in the way of making SS stronger."
Don't blindly blame Romney and/or Ryan for this mess, instead people should start LISTENING to solutions and decide which candidate has the best plan to get us out of this mess!
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