No Retirement Plan? Remember, Life Can Get in the Way

Photo_113494_20171008You might be planning to work well into the later years of your life. However, that doesn’t mean that your employer or your health or the situations in life that can change quickly are going to cooperate, according to The New York Times in “Why Working Till Whenever Is a Risky Retirement Strategy.”

The article concerns Ms. Cleo Parker, who intended to work well into her 60's as a marketing analyst.  However, her long-time job with an ad agency ended, when she turned 50. She worked a series of short-term contract and full-time positions for a decade, and her last full-time job ended in 2018.

The problem comes when workers run up against age discrimination, being overqualified for many jobs and having to convince employers that you are really, truly, okay with being paid far less than you were paid in your prior career.

It’s fine to plan to postpone retirement and keep working, but you also need a backup plan.

Today’s older American understands that working longer is a better way to secure his or her retirement. A study from the Employee Benefit Research Institute found that 33% of workers expect to retire between the ages of 65 and 69, and 34% plan to retire at age 70, or beyond, or never.

Another study, from the Center for Retirement Research at Boston College, found that 37% of workers retired earlier than planned, and that the odds of their success fell as the goal became more ambitious. Of the 21% who planned to work to age 66 or later, 55% failed to reach that target date.

The most common causes of early retirement are not choice, but health problems and job losses. Other reasons may be age discrimination, which makes it difficult for older workers to get new jobs. The quality of work matters too. Being motivated to work and feeling that you are accomplishing something matters as much to the older worker, as it does to the younger worker.

Labor-force participation rates for workers 62 and older have been on the rise for the last 25 years, but those increases are mostly among better educated workers. College grads tend to be healthier, don’t work at physically demanding jobs and are valued by their employers.

Working longer has another benefit: it allows you to delay Social Security claims, which increases monthly benefits. It also can mean more years of saving for retirement and fewer years of being dependent upon retirement savings.

However, even in a healthy employment market, counting solely on working until “whenever” to make a retirement plan work is a risky strategy. For the older worker, the chances of a full economic recovery to prior salary levels are not great.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances.

Reference: The New York Times (May 16, 2019) “Why Working Till Whenever Is a Risky Retirement Strategy”

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