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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The higher the retirement age goes, the higher the unemployment rate for younger workers will be.
We really should screw the Congress by taking away their special retirement and medical programs..
Fair is FAIR.....
America is just a bunch of citizen SHEEP afraid to take a stand and willing to putup with crap and abuse.
If Congress can employ money indefinitely to the general welfare… The powers of Congress would subvert the very foundation, the very nature of the limited government established by the people of America.
I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.
No nation was ever ruined by trade, even seemingly the most disadvantageous.
So, I believe the US Citizens need to produce and execute a CLASS ACTION LAW SUIT against all COngress and Federal Judges since 1960 -- All Inclusive for Waste, Fraud, Abuse, and Finicial Mis Management...
Read the FOUNDING FATHERS ON GOVERNMENT - Small is GOOD, Taxes are BAD.::
The states that "when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government" (emphasis added).
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Most bad government has grown out of too much government.-Thomas Jefferson
Fear is the foundation of most governments; but it is so sordid and brutal a passion, and renders men in whose breasts it predominates so stupid and miserable, that Americans will not be likely to approve of any political institution which is founded on it. John Adams
When the people fear their government, there is tyranny; when the government fears the people, there is liberty.:
The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government Thomas Jefferson
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Has anyone out there ever looked at what they actually put into SS? Take a look at your statement. It tells you the amount you put in and the amount your employer put in and what you will recieve each month once you retire. And lets say the government invested it well. It would still only last about 10 years. Who started the rumor we all have tons of money in our own account? If you do the real math you will see the government is paying out more then anyone put in.
And the people who paid in and then died before retiring - I don't know what happens to that money. But I do know it doesn't belong to me or anyone else out there. I hope to plan better so I don't have to live off some dead guys money.
All you have to do is get a government job. You'll never have to worry about money or medical. We have someone who worked as the chief of Bell P.D. for one year who's going for over $500,000 a year in his upcoming retirement. He's in his mid-50s. I think I remember reading about a librarian in San Diego getting over $250,000 a year in retirement. Way to go California. The land of the Union dominated politicians.
This article refers to "eligible to retire at 62 and full retirement at 66'......that perpetuates the myth that Social Security is a retirement income, when in fact, it is a retirement supplement. Get the difference? YES, for millions either poor luck or poor planning will leave them with only Social Security, but 401, 457, pension plans may all have an 'eligible to retire date' that is not 62 or 66.
when I get laid off at 60 because I'm not able to do maunal labor jobs any more.
I'll just be out of luck for 20 years. awesome. I guess I better work on my greeting skills for walmart.
Perhaps we should look at the problems that collapsed folks retirement savings in the last recession and perhaps we should hold the culprits LIABLE for that. People like Madoff shouldn't be in posh prisons, they should be doing hard physical labor till they drop.
The time has come to hold all classes responsible for their actions, no hiding behind the reprehensible "just taking care of business" excuse that these people live by. If you want to fix SS just raise the taxes both parties pay by 0.75% and gradually increase the retirement age. Also the cap on earnings should be removed, if the well off don't care to pay then we can ask them to move elsewhere. maybe they would be happier in Saudi Arabia?
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