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Wednesday, August 29, 2012

Postponing Retirement Indefinitely


More than a third of adults near retirement age - 35 percent - said last year that they simply don't expect to retire. That was up from just 29 percent two years earlier.

More than four in 10 of these “pre-retirees” who don't expect to retire say it is because they are financially unable to do so. They cite the need for extra income and the maintenance of employer benefits as the main reasons for continuing to work.

That was among the findings in the “2011 Risks and Process of Retirement Survey Report” from the Society of Actuaries.

“There is a core group of people earning a paycheck who feel, for whatever reason, they aren't going to be able to support themselves in their retirement ye ars,” said Carol Bogosian, an actuary and retirement expert.

The survey was conducted for the society by Mathew Greenwald and Associate and the Employee Benefit Research Institute in July 2011, using telephone interviews of 1,600 adults ages 45 to 80. Half were retirees and half were pre-retirees, who were still working. The margin of sampling error for the survey was plus or minus 4 percentage points.

The findings suggest that Americans need to recalibrate their expectations about how long they can actually work, she said. While many pre-retirees say they expect to continue to work well past traditional retirement age, that may be “wishful thinking” - or an excuse for not saving and preparing, the report says. The reality is that many people actually retire earlier than they expect, whether because they lose their jobs and can't find new ones, or because of failing health.

Half of retirees (51 percent) report that they re tired before age 60. But just one in 10 pre-retirees (12 percent) think they will retire that early. Instead, half of pre-retirees who expect to retire say they will wait at least until age 65.

That gap, combined with the failure of many people to plan for a long enough retirement period, may indicate significant future financial problems for many, Ms. Bogosian notes.

A more realistic plan might be to work two or three years longer than you may originally have expected, to earn additional income and maximize your Social Security income, she said. And workers in their 50s need to think strategically about what skills they need to acquire to keep working longer, whether in their current career or a new line of work.

Are you planning on working longer in retirement? What sort of work do you expect to be doing?