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."
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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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>>>>>>>>>>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.<<<<<<<<<<<
This Tresidder is even nuttier than Benmoshe!
Robert Benmoshe is nuts! They need to lower the retirement age..............not raise it! This raising of the retirement age is what screwed up our economy to begin with. It pulled money out of the economy that we desperately need and put millions of people on welfare..............that money created JOBS and kept local economies going. When a person retires, it does two things for our economy:
1. It leaves a job opening for an unemployed individual.
2. It removes money from the government coffers and returns money into the hands of the private citizen who in turn spends it back into the economy creating even more jobs.
But Robert Benmoshe and obviously our government employees are way to stupid to recognize those two little facts!
Wake up America! Raising the retirement age is nothing more than a huge embezzlement scheme by the likes of AIG and our government employees.
Time to file charges against the like of Robert Benmoshe and any and all government employees who were involved in changing the SS retirement age!
It always surprises me that these discussions talk about what will or should happen by only discussing the financial need. What I seldom see discussed is the state of people's health and how that will impact the retirement age. While we are living longer, I don't think we're getting as many additional healthy productive years as we are just total years, at least on average. How many people will be in good enough health to work well into their 70's?
"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."
This is Pollyanna crapola of the first rank. The reasonable expectation would be: If you couldn't avoid the "grind" when you were young and energetic and needed to "make it big," your encore in the Dwindles years will most likely be a sorry repeat of the first time around.
What do you have a chance of, the second time around? Think part-time greeter at a Wal-Mart.
I worked for a large company that was purchaed by another company in the same industry. A buy out, or should I say sell out. We had a CEO who ran the company for many years, growing it into a powerful well respected company. That CEO who was with the company for many many years and resisted any attempt to sell the comany(he was a buyer not a seller) had a second in command who become CEO upon the retirement of the long standing and respected CEO. Withnin 2 years of the former CEO's retirement we were bought out for many billions of dollars. The employees, within 2 years of the buyout saw thousands of layoffs, the closure of plants and the elimination and consolidation of jobs. Long time employees were let go and replaced by emplyess of the acquiring company. The new CEO worked a deal where he walked away with 53 Million dollars in cash and stock options while thousands of his former colleagues were let go in a rapidly decling economy. The company was totally viable and extremely profitable on it's own without any sale/merger. The CEO was to stay on as a consultant, of course we have never heard his name mentioned over the past 5 years. He took the money and ran as fast as he could to his Swiss bank account and never looked back. He orchestrated the deal that would best benefit himself with little regard to colleagues. We were told we would see tremendous benefits from the sale. If layoffs, plant closures and elimination of the pension plan are tremendous benefits I would hate to see the other end of the spectrum. Only one person benefited from the sale. This is the new America, the baby boomers America, the greed and profit America...
Social Security would be much more solvent if all of a persons income was subject to taxation. Presently SSI taxes are only assessed on the first $115,000 (or so) of income someone makes. So if, for example, you are a professional athlete making $10 million a year, you don't pay taxes on the vast majority of your income. Same can be said for any person making huge yearly pay checks. Tax all income and see how far out into the future that Social Security stays viable.
Baby Boomer destroyed this county. Make them work till 80!
If you dont save you dont retire!
The real retirement age should currently be about 82. Reasoning? When instituted Social Security set the retirement age at 65 when the average lifespan was 61. Thus SS expected to pay benefits to fewer than half the people that paid into the system. Current average lifespan is 78, thus the curren retirement age should be about 82 to match the expectation of paying benefits to less than half the people that paid into the system.
Now do you understand what is wrong with SS?
I have a question, with unemployment staying high, and it doesn't seem it will be changing to quickly I am confuse about how easy it is to just keep your job as we are lead to believe. I was let go after 17 years of employment because of restructuring, I have been unemployed and underemployed for 5 years. I was at the top of my scale working hard and doing an excellent job according to performance appraisals. I am in my early 50's with experience and can not find a job, I don't even get call backs!
So what is one to do? If I have to work for 20-30 years, where do I work? Will I get a job soon? So far it doesn't feel very good. Starting a new career doesn't sound like it is a promising option. I will then be an older worker with no work experience in a new field. I believe a young person with a little experience seems the most likely to get the position. They are faster, more tech savvy and have more year to work and may stay with the company for a long time. It sounds a bit like age discrimination, something I didn't believe but now I am living it.
So what is the average wage for someone over 55 and have changed careers, has been "unemployed" for 9-10 years making $75,000 before being let go, and they just change careers? How often are these types of workers let go from their new job? Then what have they been choosing to do until they hit full retirement age?
Haven't seen any articles addressing this issue. Has anyone else????
Age discrimination is rampant in the job market. I encountered it at age 40. These companies want to hire younger workers, pay them less or more depending on the circumstances and tell you that you might not be able to work with them because you are too old. They also break many employment laws when they interview you as well. If you can work for yourself do it, then no one has a reins around your neck and gives you marching orders.
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The self-employed have several ways to save more for retirement in tax-advantaged accounts. Here are 3 of the most popular options.
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