Thursday, February 19, 2015

How long do you need, and do you want, to work after your retirement age?

Statistics gives a solid positive answer to the question, posted in the title. Yes, more and more men and women working not only past traditional retirement age but also into their 70-s, 80-s and sometimes beyond. Over the coming decade, they will be the fastest-growing segment of the workforce, according to the Bureau of Labor Statistics. Among 65- to 74-year-olds, labor force participation is predicted to hit 32 percent by 2022, up from 20 percent in 2002. At age 75 and up, the rate will jump from 5 percent in 2002 to 11 percent in 2022. At the same time, participation rates among younger age groups will be flat or will even fall.

"The number of workers over age 75 who work is still a small phenomenon as a percentage of the population, but it's definitely trending upward," says Sara Rix, senior strategic policy adviser with the AARP Public Policy Institute and an expert on older workers. "It might accelerate if people were able to make midlife career changes more easily. Who wants to do the same thing for 20 more years that they have been doing for a long time? Many people now working into their late 70s and 80s have careers with a lot of variety that helps keep work interesting and enjoyable."

Rising levels of educational attainment are fueling the trend, says Gary Burtless, an economist with the Brookings Institution. In 1985, only 15 percent of men between 60 and 74 had a college degree; in 2011, 32 percent did. The figures for women lag but are following the same general trajectory, Burtless says. To a striking degree, working after retirement age tends to be the province of a high-status, well-educated subset of the population: 61 percent of those ages 62 to 74 who were working in 2009 held doctorates or professional degrees, compared with just 28 percent of those whose educations stopped after high school.

Certain professions are notably friendly to their oldest practitioners, for several reasons. White-collar professionals in fields such as the arts, medicine, law, education or business are not only spared the physical toll of blue-collar labor, they also often receive formal or informal job protections, such as the tenure system in academe. Plus, "many of these jobs have greater social prestige," says Burtless, "so they offer people who remain in them status that they might partly lose when they leave their jobs."

Not long ago, it seems, the typical American’s goal was to retire at 58, 60, and 62— certainly no later than 65. There are certainly people who delay retirement because they are still healthy and love to work. However, many put it off instead because their 401(k)’s are so puny, or because their medical bills, even with Medicare, are so high. Or some delay because their stock portfolios haven’t fully recovered from the unexpected fall, despite new highs set on the stock market last week — nominal records spurred by low-interest-rate policies that have at the same time hurt retirement savings.

Some baby boomers understand all too well, why they are called the sandwich generation: they need to continue working far longer either than they intended, because the bill for sending their children to college is so steep or because the cost of keeping a parent in a nursing home is so high— or both.

Another twist is that many more Americans are living into their late 80s and 90s — and many of them are outliving their retirement savings. Some companies are rushing to plug this hole by offering annuities that do not begin until age 80 or 85. The retirement picture in the United States has become so fluid that one survey found that while 43 percent of Americans say they cannot wait to retire, 41 percent do not expect to ever retire at all.

"Working a few more years and delaying Social Security until you're 70 can make the difference in retirement between cat food and sirloin," says financial planner Harold Evensky, who walks the walk on this issue. At 72, he maintains an active role managing his firm.

The 20th Century concept of retirement was largely deliberately invented. A variety of interests wanted to move people out of the labor force so younger people could be accommodated. The work was not easily done by elders. New industries revolving around investing for retirement and the activities of retirement set out to convince people that retirement was natural, and a kind of new right of modern living. For a time it has seemed to work.

Now however, it seems likely that most 21st Century elders will not retire. They will slow down, work less, work at new things, have some leisure, but continue to engage in useful, income producing work in a variety of arrangements and patterns, perhaps for all of their lives. It is safe to say that the first quarter of the 21st Century will see a great re-invention of the third phase of life, away from classic retirement and toward something like “life fulfillment.” The end of retirement and beginning of life fulfillment may be a kind of liberation.

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