Most Older Workers are Postponing Retirement – Is That a Bad Thing?

2 Shares

This past spring Hunt Scanlon Media reported the results of a recent CareerBuilder survey on retirement. It indicated a full 53% of workers 60 and older are postponing retirement. What’s more, 40% don’t think they’ll be able to retire until age 70 or older.

What does that say about the current state of retirement?

I think it speaks to the new reality of retirement in the 21st century. It’s not as certain as it once was, and it’s becoming beyond the reach of many middle-class workers.

Most Older Workers are Postponing Retirement – Is That a Bad Thing?
Most Older Workers are Postponing Retirement – Is That a Bad Thing?

This is a topic I’ve been writing about for the past several years, as well as various strategies to work around it. It seems the predominant official reaction is denial, as well as the perpetual admonition for everyone to save more for retirement. That puts the “blame” squarely on workers, and ignores certain fundamental realities.

Why People are Postponing Retirement

We probably don’t need to dig too deep here, but here are some of the more likely causes:

The disappearance of traditional defined benefit pension plans. Very few people are covered by traditional pension plans anymore. The Social Security Administration has reported a decline in traditional pensions from 38% of workers in 1980, to 20% by 2008. We can presume that number is even lower in 2018. It removes a critical support leg from the retirement picture of middle-class workers in particular.

Employment instability. From World War II until the 1970s, most workers could reliably expect lifetime employment. Today a typical job last only a few years, and some are measured only in months. Even if you’re a committed saver, it’s very difficult to amass a large retirement savings portfolio when you’re changing jobs and income levels every few years.

The continuing hangover from the Financial Meltdown. Millions of people experienced job losses, career failures, bankruptcies and foreclosures in the crisis. Some recovered, some didn’t. Even among those who did, many found themselves permanently impaired. For example, a $60,000 job was replaced by a $40,000 job. They may not be counted as unemployed, but they’re definitely in a weakened state.

The cost of living is rising faster than incomes. I think most of us are aware the real rate of inflation is considerably higher than the bogus CPI. If they report inflation at 2% – which is the basis of increases in salaries and Social Security – but the real rate is 4%, you fall behind by 2% each year. Over 10 years, this results in a decline in your standard of living of more than 20% in real terms. This explains why the majority of Americans are now living paycheck to paycheck.

Less Obvious Reasons for Postponing Retirement

Those are the more obvious reasons for postponing retirement that most people are aware of. But there are a few that might be flying under the radar.

I think one is the fear factor. Life, employment, and finances seemed more stable between World War II and 1999. But since 2000, we’ve had two serious stock market crashes and two deep sessions. That’s too much negative activity in less than two decades. People correctly interpret the ominous implications it has for the future – despite the official denials.

There’s also the unspoken threat of the collapse of both Medicare and Social Security . Both problems are officially ignored by the powers that be. But for the average non-wealthy American, this is a source of deep concern. Due to the rolling crisis with healthcare, concerns about the stability of Medicare maybe even greater than those for Social Security.

Longevity plays yet another role in postponing retirement. If you expect to live into your 90s, there are serious risks involved in retiring in your 60s. Previous generations retired with the unspoken assumption that they’d live only another 10 or 15 years. But if you live as long as 30 years beyond, retirement has serious risks. We just have to look at the last 20 years to imagine the implications.

Even if you have a large amount of retirement savings, it’s easy enough to imagine outliving it if you’re going to live in your 90s.

More Pleasant Reasons for Postponing Retirement

So far we’ve been discussing dark reasons for postponing retirement. But there are other reasons that may be much more positive in tone.

I’ve long maintained that retirement may no longer be necessary for a lot of people, maybe even the majority. Now it would be better to be able to retire, and choose not to – rather than not being able to retire at all. But there are compelling reasons why millions don’t need to retire, certainly not in their 60s. Some may even be able to work well into their 70s. And if they can, there’s absolutely nothing wrong with that.

When the concept of retirement was being formulated in the middle of the last century, it was based on a labor force primarily engaged in physically stressful occupations. That can include farmers, laborers, factory workers, and the construction trades. Retirement from those occupations made abundant sense. The body wears down with age. By the time you reach your 60s you’re often physically unable to continue.

That’s hardly the case today. Most people work in white-collar or service occupations. In most cases, the physical aspects of a job are minimal. The stress is more mental than physical. But most of the work can be performed even when the body as well past its peak. The Internet revolution has made these occupations even less physically taxing.

Among this group – which represent the majority of workers today – the primary motivation for retirement seems to be based on expectation.

The concept of retirement was cemented in the average person’s mind as a result of the more tangible need to do so by earlier generations. We can suppose that since retirement is considered a desirable goal, it continues to be so even though it’s no longer entirely necessary.

Downshifting Rather than Retiring

The bigger retirement “need” seems to be to escape from the stresses of the workplace. But there are other ways to reduce stress, without making a complete exit from the workforce.

There are three aspects of work that I believe escape most people, but will make many rethink the whole idea of retirement:

1. People who like what they do don’t retire. This is a pattern I’ve clearly identified over the years. In particular, the self-employed seem especially reluctant to retire. It makes sense too. If you’ve spent years building a business, it’s not just what you do – it’s part of who you are. The self-employed are rarely anxious to sever that arrangement. That’s probably true of anyone who likes what they do. The key it seems, is to identify work you actually like to do.

2. We all need to be relevant. As I get older, this becomes increasingly important to me. I’ve heard this from others as well. The work we do isn’t just about earning a living. We don’t often think about this, but it really establishes our place in human society.

Few of us would be content to merely survive. Most of us need a purpose, which usually comes from making some sort of contribution to society. Work is a critical component of that contribution. I believe this is why many retirees are not nearly as happy as they thought they’d be. Surviving while being irrelevant strikes me as emotionally and intellectually empty.

3. Work doesn’t have to be a fixed occupation. I believe most people narrowly define work aa the specific occupation they’re currently in. But the reality is we’re each capable of several occupations. If you were to move into one of you found more agreeable, retirement wouldn’t be an absolute necessity.

Approaching Retirement with a More Balanced Strategy

The concerns driving people to postpone retirement are entirely legitimate. Though it seems like a contradiction, the state of the economy can have a significant impact even on the retired. For example, if you’re relying on income from your retirement portfolio, a stock market crash or prolonged bear market could significantly lower your investment income.

Longevity is also – somewhat ironically – a source of insecurity. If you retire at 65 and live another 30 years, there’s a very real possibility of outliving your money. This is especially true with interest rates near record lows. There are few mental pictures more frightening than the combination of old age and poverty.

But let’s take a more positive view of our lives. The reality is there are more non-physically taxing occupations than ever before. It may be possible to transition into one that works better for you. And if you’re on Social Security, it will probably only need to be part-time anyway.

We should also consider the technological advances that have taken place in recent years. The Internet has opened up an entire new universe of occupational opportunities. We could probably say the same of smart phones. Either can enable you to either work at home or at least work remotely.

For the growing number of people who will probably never be able to fully retire, the real goal may be to find and create more sustainable work. That may sound like the exact opposite of retirement, but maybe that’s something we need to move away from anyway. Maybe the real goal is to create a balanced life, rather than a retired one.

Marching Toward Alt Retirement

I don’t think any of this is as scary as it sounds on the surface. We seem to be marching steadily toward some form of “alt retirement”, and that’s probably not a bad thing.

We have to recognize the reality that people are living longer. Retirement at age 62 or 65 is no longer crucial, or even desirable.

Postponing retirement will open important opportunities. One is finally moving into a career that you actually like. After a lifetime of working in something else, you may find the change refreshing and invigorating. That’s important as we get older. It will also be a crucial opportunity for people with minimal savings to get into a better financial position.

Yesterday at the gym I saw something encouraging. It was midmorning, and the majority of the scores of people working out were in their 60s and 70s. Three or four might’ve even been in their 80s. This speaks of a very different picture of “old age”. You wouldn’t see such a thing years ago. But many older folks today are taking greater responsibility for their health.

My suspicion is that if you can work out, you can still work. And if you can simultaneously maintain better health and a continuing connection with- and relevance in-the world, it’s a win all around.

So maybe we should embrace this as a positive change. At every phase of life there are leaders – that top 10% or 20% who are digging in and making things happen. You can consciously choose to be part of that elite group. Millions of people already are.

Are you still thinking of retirement in your 60s, or are you among the growing number of workers seriously considering postponing retirement?

( Photo by donjd2 )

2 Shares

16 Responses to Most Older Workers are Postponing Retirement – Is That a Bad Thing?

  1. Another well written article! I had 4-5 paragraphs written but decided to just go with, well done!

  2. I’d have been seriously interested in reading those 4-5 paragraphs. Rick haven’t you realized yet that my real purpose in writing these articles is to see what others are thinking on these topics, and solicit their opinions??? Opine away! We all learn from each other.

  3. Kevin – It is highly unlikely that I will be retiring in the traditional sense of the word – I was laid off at the age of 60 and had to dip in to my savings to get through the next 13 months of being unemployed, from which I am just now recovering. I’m now happily working at a small nonprofit full time. The problem as I see it for older workers is the rate of inflation – home and car insurance increasing, utility expenses always rising, although I have Medicare as my primary insurance, the cost of the supplemental insurance continues to increase. If I’m able to physically continue to work until 70, I will do so, but increasingly worry about being able to keep up with living expenses as I age. The area that I live in has virtually no affordable housing for older people, so right now ageing in place at my home is the only affordable option. The only new affordable housing being built is in smaller outlying communities not close to shopping or healthcare services. Why do you think it is that cities, communities and local governments do not have affordable housing for an ageing population as a #1 priority?

  4. Hi Kathleen – What you’ve experienced is the employment instability I referred to in the article, and it’s hardly uncommon. It’s bad enough when it happens to younger people (and it does) but it’s a game changer for people over 50 or 60. A job loss and prolonged period of unemployment are a common reason why people are unable to retire or must postpone it. It’s made worse by the all too common (but absolutely necessary) step of draining retirement savings to survive in the present.

    Don’t get me started on affordable housing. The whole housing regime in this country is the stuff of conspiracy theories. Communities don’t want affordable housing because it “hurts property values” (which violates the first commandment of housing of “Thou Shalt Not Take Any Action Which Shall Cause House Prices to Fall” – translation – all policy must be directed at steadily rising prices). On a fiscal level, local governments want higher priced housing to provide higher property taxes. Affordable housing, especially for seniors, is usually high density/low tax base type property. The famed “greater good” is always abandoned in favor of more revenue.

    When I was a kid, older communities in particular had boarding houses or at least private homes that rented out rooms. Since that’s deemed to hurt property values, it’s largely disappeared. In effect, all lower cost housing options have been gradually eliminated. That’s completely consistent with the housing price spiral we’ve been suffering through for the past 30-40 years. It won’t get better, because it’s official policy. I hope you understand that much.

    I believe shared housing will be the ultimate solution for millions of people, but especially the elderly. We all need to be open to that. My wife and I have discussed this, and we’re open to it. Hopefully it will be with one of our kids (which will also help them financially), but we’d consider the right situation with another couple. Or maybe we’ll take in boarders.

    I’m sorry to say that the easy solutions – the kinds that sustain “the life to which we’ve become accustomed” – are getting harder to keep. We really do need to think in unconventional terms, even borrowing from history. My overall goal is to lead a happy, productive and rewarding life, no matter what the circumstances. That can take different forms, but by being flexible, I feel confident I’ll pull it off.

  5. Deferring retirement is great, as long as you continue to have the option.

    The older you get, the more likely you are to have to stop working for health reasons. So you can plan to work ’til 70, but your diagnosis of Parkinson’s disease (for example) at age 63 may screw that plan completely. You can do your best to stay healthy, but there are not guarantees.

    Ageism is real. When you lose your job at 66, you may find fewer and fewer employers willing to take you on. Not everyone is an entrepreneur. Not everyone can make a living writing a novel.

    The argument that people can retire later because jobs aren’t physical is a weak one. It is true that the industrial age featured factory work that was incredibly strenuous. But today’s jobs are strenuous for other reasons. My job in IT is stressful and mentally tiring. Cognitive ability also declines with age. For me, at age 52, it is substantially harder to get through a work day than it was 10 or 20 years ago.

    You may think you’re going to work ’til 75 helping customers in the plumbing department at Home Depot, but after 8 hours on your feet, on cement, you may not be able to stand.

    Planning to postpone retirement is a risky proposition.

    I would rather plan to retire at 60, and then find myself working to 61 or 62 because I have still have something left to give. If that means I need to live in a smaller house and drive a smaller car, then so be it.

  6. I agree with you Neil, we do need to be ready to retire. But not everyone is, and often plans get derailed due to an unexpected layoff. This article is written for the majority who won’t be able to afford retirement at 62 or 65. I also agree on what you’re saying about work. Yet I see an increasing number of elderly in more and more jobs – some I’d never expect to see. So clearly something else is playing out.

    Ageism is very real, but you may get around it by working for small businesses. Younger, more qualified workers aren’t applying to them for jobs. It’s a real opportunity for older workers. It’s also easier to work at a reduced pace, since small businesses don’t have all the rules and regs of the big guys. I also do believe most people have enough qualifications to do something to earn money. No, not full time, and you’re right when you say ability to keep up declines (happened to me in the mortgage business in my 40s!). But all that can be worked around. I see too many over 65 types doing that every day. But what I would suggest is being purposeful about developing a post-retirement career that fits you’re own profile and abilities.

    At the opposite end of the spectrum, last week my wife and I were at the beach. At about 10:30 pm the crews came out to clean the public bathrooms. In one team was a guy who must have been at least 80, and he could barely stand. But here he was cleaning bathrooms on a Monday night at the beach.

    If it looks like that will be the future, you owe it to yourself to do what you can to develop some sort of skills that will see you doing more desirable work. No, not everyone will be able to do certain types of work, but not everyone will be able to save enough to make a complete break from the workforce at 62 or 65 either. If you think you can’t, then it’s best to have a Plan B in the wings. It’s always best to develop that before it’s needed. The worst strategy is to worry about it and do nothing.

  7. OK you asked for it!!!! The lack of pensions is not the problem IF as you said only 4 out of ten had a pension in 1990 and now 2 out of ten have one, it can’t be the problem, UNLESS 6 out of 10 people in 1990 had to delay retirement. My wife has a pension, well not really it is with GE and it is 31 billion in debt so I should say my wife had a pension, but we scrimp and save as if we do not have one and always have, so the fact that we may not get the full pension will not force us to retire later.

    The idea of 401k’s started in the early 1980’s that gave boomer’s around 30+ years to save and to let compound interest do its magic. So if in 1980 they put in 5k into their 401k and only put in 5k every year after that until 2010, they would have close to a million dollars, that is more than enough using the 4% rule and SS to get by. And if all you could save was 5k you were spending too much.

    Then if someone is 58-62 years old and gets laid off, yes finding a new job will be tough, especially for the same pay, BUT if you are not financially ready to retire by the age of 60, you have done it wrong, those last 5 years of working will not make that much of a difference, especially if you were not saving large sums in the first place. Article after article points out that boomers never saved for retirement, the houses did not triple in size because of Generation X, 2 and 3 cars did not just become the norm in 2010. The great American expansion was driven by boomers spending everything they had to keep the engine of society running and that came at a cost, they work.

    keep up the great articles

  8. I can’t agree Rick. That’s the standard narrative by the MSM and financial media. If you put $5k into a retirement plan each year for 30 years, at a blended (stock/bond mix) of 7% per year, you’d have a little less than $500,000 (ran the #s on Bankrate). But the $5k per year contribution assumes an annual income of $50,000 per year going back to 1988. The median wage in 2018 is just $45,900, and it was a heck of a lot lower 10, 20 or 30 years ago.

    I don’t mean to poke holes in what you’re saying – over spending/over-consuming has been a problem. But the scenarios that would have everyone retiring a millionaire make three basic assumptions: 1) You’ve been earning well above the average wage, 2) you’ve earned that income consistently for 30 years, with no significant disruption or career ending event, 3) and you’ve been mostly invested in the stock market, through and after at least two stock market crashes. That’s a perfect world scenario, and it doesn’t describe the experience of the average worker. Statistically, it applies only to the top 10%, or maybe stretching to the top 15%.

    This article isn’t written to that group. Most blogs and financial sites do write to that group. I’m choosing a different audience here, the people I see every day. I hope you can respect that. You’re right for the group you’re referring to, but I’m right for the average worker.

    Do you see where I’m coming from?

  9. Yes I see were you are coming from. On nerdwallet.com I used 8% returns and it was $732,000 and I also only used 30 years when most people work closer to 40 years. And I did not put in the company match which is usually another 3-5% per year so add that all together and you will be closer to 1 million.

    Also the number that has been thrown around lately to retire on is closer to $668k and with SS you are suppose to have enough. (that works out to be about 25k from your investments and 25k from SS.) Not great but not bad for 2 people.

    I do see your point of view that many people did/do not have 5k to save, and I also remember last weeks post where you said the average family spends 12k on cars.

    We can meet in the middle and say life is extremely tough and will throw some major curve balls at you and you should save and save and save almost until it hurts.

    Thanks for your great and well researched articles.

  10. “We can meet in the middle and say life is extremely tough and will throw some major curve balls at you and you should save and save and save almost until it hurts.” – We’re in agreement on everything you said in that sentence. Life gets disrupted – it’s actually perfectly normal. That’s the part the MSM always conveniently ignores. I found out otherwise in my extended stints in accounting and mortgages. Even people who are very talented and have a lot of money slip on banana peels. But yes, we all need to save til it hurts, even when we retire. Saving isn’t an option, it’s a survival skill. That’s something that’s been lost and a major reason people don’t bother to save at all. People often assume they’ll be protected by all the various social safety nets. But saving money is even more important if you don’t have a lot. Any amount of savings will put you in a better position than you’d be in otherwise.

    I never mean to be confrontational, but I’ve seen too much of the non-perfect world playing out, and prefer to discuss strategies to deal with that outcome, rather than speak to the perfect world crowd.

  11. NO worries, you write from your experiences and I write from mine. I lived a life of debt hell until I was 30. I worked low paying jobs but spent like a drunk sailor, and I know a very large percentage of Americans do the same. And you took a extremely hard hit to your career mid life. Yours would be much harder to recover from, that is for sure.

    We both had to figure out life anew.

  12. Hi Kevin. Yes, another enjoyable read. I’m wondering if the old saying “life happens” (I cleaned up my vocabulary for you) and its resultant consequences only start to sink in as you get older, say into midlife. When you’re younger, you feel invincible. Full disclosure: I know I did. But age and life slowly creeps up on you like a shadow at sunset. One moment you’re enjoying the sunset, the next you’re in the shadow of life. So many things happen during that time, a marriage, divorce, a joyful planned pregnancy turned into a special needs child, job loss, a health emergency, addictions, on and on it goes. I’ve seen all of these things in people’s lives. It takes a lot of time to experience what life has in store for you. Some of them wonderful, some not so much. To use another cliche, I’m in my sixties now, and “if only I would have…….when I was younger”. Fill in the blank with your own personal story. I have a boatload. I truly like that you speak to the crowd who want to do the right things but are still sometimes struggling with the “if I only..”). I find great comfort in reading your work because it makes me realize I’m not alone. My husband and I are doing ok, but I can assure you it wasn’t always easy, and we work long hours at our small business. I glad that we can all read your words, hear each other’s stories, and learn from each other. It’s like a support group where we all wear a mask! 🙂

  13. Thanks Bev! I don’t know if you read the exchange between Neil and I, but I stressed that I don’t like to write to the perfect world crowd, and that’s mainly because that’s not the world most people live in. As you point out, all kinds of things happen in life, both good and bad. None of that is abnormal. In fact, quite the opposite. Life is messy! If you manage to avoid disasters consistently, you’re truly blessed. But if you don’t, you’re just normal. And I like to think there’s a certain nobility in facing and overcoming the obstacles. I always found inspiration in Frank Sinatra’s My Way. Listen to the lyrics in that song, I think they describe what most people experience, at least the ones who face troubles and emerge in a better place. That’s also Biblical. I think my favorite Bible verse is John 16:33, “I have told you these things, so that in me you may have peace. In this world you will have trouble. But take heart! I have overcome the world.” The operative point is “you will have trouble”. Not might, or may, or perhaps. So we deal with these problems, and though we may be impaired by them, we’re never totally destroyed. That’s the nobility part.

    In most respects, an imperfect life of facing troubles and overcoming them is a better example of a life well lived, than of someone who has had it relatively easy, and never faced serious trauma. We can appreciate the good things in life, which often don’t have a dollar sign attached to them. The world tells us we have an obligation to avoid trouble, and we should certainly do what we can to avoid it. But real life says trouble often finds us, in spite of our best efforts. I’m no longer ashamed by that, and I don’t think anyone should be.

    Some would disagree, but you know by now I’m not a conventional thinker.

  14. Great article as it doesn’t point fingers at people to do things but makes everyone think about their status quo at present. Hindsight is always better than foresight, plus we need to stop looking at the Jones as a model for success, because who knows how really financially set they are. we all need to stop drinking the Koolaid that they are trying to force feed us and do what we need to survive, period. If you didn’t do that required/suggested savings from the start. learn to enjoy living without all the unnecessary luxuries, you think you need. Stop impulse spending, make that a priority. If you’re one of the unfortunates getting laid off in all the recent layoffs, take a deep breath and calmly look at your options.
    As far as needing to continue working past a certain assumed age, never say, it can’t happen because of life unforeseen circumstances. Too many of us don’t plan/react to change, we assume everything will always stay the same. We need to control the change. If you have to work, then work at something, you don’t mind doing. Most of us older workers are more reliable than the younger workers. Hey, I heard that this summer, here in my area, they hired seniors as lifeguards because less young people are applying, and they are doing a great job.
    It is only a matter of attitude.

  15. Hi Maria Rose – You’ve touched on a central theme of my writing: I’m tired of all the economic problems being blamed on the citizenry, as though the system is basically good and well-functioning and we’re all just a bunch of under-achieving airheads. So many people are living on the financial edge precisely because the system is malfunctioning. Anyone who wants to pretend everything is as great as the mainstream say it is are welcome to hang out on those media. On this site, I want to focus the conversation on reality, and what we need to do to work within it. Not the Candyland, mythical perfect world of the media. Living in that fantasy only causes us to blame ourselves, and to feel like we don’t measure up. BS, I say. There’s no shame in being real.

    You also make a good point about seniors taking more jobs. The young people don’t want to work. They’ve been herded into thinking all they need to do is get their educations and they’ll live happily ever after. That myth is what’s been driving so many to take on obscene levels of student loan debt (once again, all these issues are related). I’ve been putting together some research on this subject, and plan to do a future article on it.

    And of course in the twisted way reality plays out, the missing younger workers are making more opportunities for older workers to continue to work. It’s kind of working out in a backhanded sort of way. That’s why we all need to stay aware of what’s REALLY going on out there, and tuning out the mainstream noise that almost always sends us running in the wrong direction.

Leave a reply