Living longer and retiring earlier doesn't appear to be a good combination. Surveys show more baby boomers have put off retirement because of the recent economic downturn.
But there could be another reason. With people now living well into their 90s, many people nearing the traditional retirement age realize they don't have the money to retire now, and didn't have even before times got rough.
While many people downsize in retirement and reduce expenses, the bills still come each month. Social Security goes only so far and, with the precarious nature of the government's unfunded liabilities, it might be wise not to put all your eggs in that financial basket.
Social Security dependency
But according to the Social Security Administration, Social Security benefits amount to 39% of the income a typical elderly person receives. Among elderly Social Security beneficiaries, 53% of married couples and 74% of unmarried persons receive 50% or more of their income from Social Security. Twenty-three percent of married couples and about 46% of unmarried people rely on Social Security for 90% or more of their income.
So the simple answer to the question, “how will you fund retirement,” may be to keep working. Stay on the job, keep putting money away in a retirement account and delay Social Security benefits as long as possible.
Boomers appear to be doing just that. A survey conducted by Country Financial found 38% of boomers said they would delay retirement by at least two years due to the downturn, the highest of any age group.
Don't want to be dependent
Only 31% believe the government should do more to fund Americans' retirement, compared to 34% of Americans overall.
"Boomers might be slamming the door on more government assistance because of the national debt or they're satisfied with Social Security as is," said Joe Buhrmann, manager of financial security support at Country Financial. "The boomers showed younger generations it's never too early to save. Start setting aside money in your 20s if possible and establish a long-term financial plan to stay on track and meet your goals."
Staying on the job longer presents a problem, however, if you become unemployed. And it seems to be a special problem if you lose your job as you are approaching your traditional retirement years.
Harder to find a job
A Bureau of Labor Statistics' (BLS) report showed that 5.8% of workers aged 55 and older were out of a job and actively looking last month. While this figure is lower than the national average of 7.7%, unemployed older workers are more likely to be out of work longer than their younger counterparts. In 2012, adults aged 55-64, on average, were unemployed for 54.6 weeks, compared to 36.4 weeks for workers aged 25-34, the report shows.
"Being age 55-64 and out of work is particularly difficult, because you're unable to tap into the traditional safety net programs like Medicare and Social Security," said Nora Dowd Eisenhower, senior vice president of economic security at the National Council on Aging (NCOA). "But jobs still matter for this population. With years of life still ahead of them, mature workers need opportunities now for training or retraining that leverage their experience and give them marketable job skills."
But older job seekers shouldn't assume that employers would prefer to hire a recent college graduate. AARP recently published a boomer re-employment guide with tips for older workers on how to market themselves.
What to do
If you are close to traditional retirement age and out of work, you might consider what demographic experts call a “bridge job.” It might not be in your field and it might not pay as much as you were making, but it can be rewarding and provide an income as you downsize and slide into retirement. Many people choose to work for a cause or goal they believe in, perhaps giving them a higher level of satisfaction than they received with their “career” job.
Depending on your income requirements, you can also consider starting a small, home-based business. Just steer clear of those packaged work-at-home “opportunities” that require an investment on your part. Try to choose something with no start up costs and that you will enjoy.
For example, if you are an animal lover you could start a pet sitting business. Walking a neighbor's dog while they are at work or out of town not only provides a small revenue stream but gives you some healthy exercise.
Check out some tips for starting a small business here.