Just Saying No – or at Least Not Yet -- to Retirement

Sep 12, 2016 • By • 57 Views

By Tricia Drevets

With a Republican nominee who is 70 and a Democratic nominee who is 68, the health of the next President is something on the minds of many Americans. Hillary Clinton’s recent collapse at the 9/11 anniversary ceremony – and her campaign’s subsequent admission that she had pneumonia -- highlighted this concern.

However, Clinton and Trump are just part of the many members of the Baby Boom generation who are not going quietly into retirement. In fact, according to a new Bankrate survey, three-fourths of Americans plan to continue working “as long as possible.”

And while the aftermath of the Great Recession looms in the minds of those in the Boomer age bracket, money is not the only reason they are putting off retirement. In an August survey of 1,000 adults living in the continental United States, Princeton Survey Research Associates International found that 38 percent of those who plan to delay retirement admit that they like to work.

Americans are not the only ones with the same mindset. Although America, with 65 as the national average for retirement, is on the older end of the spectrum, delaying retirement is becoming a global trend.  Here are the three main factors influencing the decision to postpone retirement.

1. Finances – According to a 2012 study by the University of Michigan Institute for Social Research (ISR), 40 percent of Americans age 50 and older decided to stall retirement plans in the wake of the Great Recession.

The study estimated that the typical household lost about 5 percent of its total wealth between the middle of 2008 and the middle of 2009. To replace just that lost income, ISR analysts estimated that the average person would need to work between three and five years longer than they had planned. The study found that, in general, the more workers lost in the recession, the longer they planned to work.

Additionally, unlike their parents, today’s older workers realize that they cannot rely on Social Security payments to maintain a comfortable lifestyle. In 1935, when Social Security was established, the average person was living to about the age of 70. With the minimum retirement age to receive full benefits then set at 65, many Americans only needed to count on Social Security for about five years.

Today, however, the average American male is expected to live to age 76 years, and the average American female to age 81.  To compensate for this longevity increase, the age for receiving benefits likely will continue to rise – it currently is age 67 for the youngest Boomers to receive full benefits --  but Americans today – young and old alike -- also realize they must supplement Social Security with personal savings.

2. Lifestyle. Another, and perhaps more important, reason for the trend in delayed retirement is the fact that Americans are becoming adept at changing careers. The days of workers staying in one job and earning the gold watch at a retirement party are fading fast.

Like their younger counterparts, Baby Boomers have embraced the idea of adjusting their career paths. Instead of slowing down, they are switching gears to seek a new challenge or to pursue new interests.

According to the 2014 Kauffman Index of Entrepreneurial Activity, people in the 55- to 65-year-old age bracket started nearly 24 percent of all new companies the previous year. The Kiplinger Report predicts that Baby Boomers will launch one fourth of new businesses by 2020.

Similar findings also are revealed in the fact that, of the 500 recent applications for an entrepreneurship program funded by the U.S. Labor Department, the average age of the applicants was 51.

People in the traditional retirement age bracket also are seeking to give back to their communities as workers in their later years. Business executives are trying their hands at social work positions, and accountants are becoming teachers, for instance. A survey by MetLife Foundation found that 25 percent of surveyed Baby Boomers planned to launch a business or nonprofit within 10 years.

For some older workers, this time of their lives is a chance to fulfill a desire to help people or to turn a lifelong passion, such as the arts, into a new career. For others, they might be motivated by the determination to get out of a job that offers them little opportunity for advancement in terms of responsibility or salary.

3. Health. Another factor in the trend toward delayed retirement is the fact that health-conscious Baby Boomers are simply not in the retirement mindset. Just as the generation born between 1946 and 1964 has redefined much of modern culture, they are redefining aging.

According to a Pew Research survey, the average Baby Boomer feels at least nine years younger than his or her actual age.

In addition, several studies indicate that delaying retirement is good for your health. For example, research from Oregon State University (OSU), published in the Journal of Epidemiology and Community Health, found that healthy workers who delayed retirement just one year past the age 65 had an 11 percent lower mortality risk than people who retired earlier.

Researchers examined data from about 3,000 study participants who were working full-time in 1992 and were fully retired by 2010. Researchers found that increased longevity was universal across different sociodemographic profiles, and even people who said poor health was a factor in their retirement decisions had health benefits from working an extra year.

OSU researcher Robert Stawski said in an interview with National Public Radio about the study that the results were the same in white-collar, blue-collar and service industry jobs. Stawski theorized that the various interactions workers continue to experience on the job are keys to better health.

Those interactions include the use of cognitive skills, such as mempry and problem solving, as well as social and interpersonal engagement.  A 2014 study of French workers suggests that these factors may contribute to the delayed onset of dementia in older adults as well. The report concluded:

“We show strong evidence of a significant decrease in the risk of developing dementia associated with older age at retirement, in line with the "use it or lose it" hypothesis. Further evidence is necessary to evaluate whether this association is causal, but our results indicate the potential importance of maintaining high levels of cognitive and social stimulation throughout work and retiree life.”

Another growing trend for older adults is a switch from full-time employment to part-time employment. The U.S. Census Bureau's Current Population Survey shows that, among employed people age 65 to 69 in 2013, 31 percent of men and 46 percent of women were working part-time.

Among workers age 70 and older, the survey showed 44 percent of men and 55 percent of women were employed on a part-time basis.

Will retirement, as we once knew it, become a thing of the past? With these factors in mind and with the Internet offering new ways of working and of working longer, it is quite possible.

Sources:

http://www.bankrate.com/finance/financial-literacy/americans-plan-to-work-through-retirement-1.aspx

http://money.usnews.com/money/blogs/planning-to-retire/articles/2016-05-13/study-delaying-retirement-might-help-you-live-longer

http://www.bloomberg.com/news/articles/2016-05-13/-i-ll-never-retire-americans-break-record-for-working-past-65

https://www.washingtonpost.com/news/get-there/wp/2016/09/10/7-of-10-americans-plan-to-work-in-retirement/

http://www.oecd.org/els/emp/ageingandemploymentpolicies-statisticsonaverageeffectiveageofretirement.htm

http://www.mercer.com/articles/cost-of-living-2012

http://www.orie.gr/download/whitepap.pdf

http://www.ebri.org/pdf/surveys/rcs/2013/Final-FS.RCS-13.FS_2.Expects.FINAL.pdf

https://www.mbopartners.com/uploads/files/state-of-independence-reports/MBO-Partners-Independent-Workforce-Index-2011.pdf

http://www.npr.org/2016/05/09/477301458/working-longer-benefits-your-health-as-well-as-your-nest-egg-study-says

http://www.ncbi.nlm.nih.gov/pubmed/24791704

About the Author

Tricia Drevets Tricia Drevets

Tricia Drevets is a freelance writer and educator who specializes in business and communication topics.