Not all those over 65 are ready to retire
Most of those over 65 are retired. Although some wish they were still bringing in a paycheck. Others chose to work part-time or are looking to do so. The younger New Seniors and the baby boomers turning 65 starting next year are not prepared to make the big jump into the retirement pool, at least not for a few more years.
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A survey conducted in September by Sun Life Financial found 80% of unretired workers saying they need at least 3 years to rebuild retirement savings because of dollars lost during the recession. This represents an increase of 16% from the previous year’s study. However, about 20% of respondents believe they will never recoup the lost dollars.
Only 42% of those surveyed are very confident that they will be able to take care of basic living expenses in retirement. And one in four strongly believes they will be able to take care of medical expenses. About 65% of these boomers have less than $50,000 in retirement assets. And half of them have $10,000 or less put away, making it too late for cutting-edge boomers to prepare for retirement and keeping them in the work force.
The rule of thumb is that the average person needs about 80% of their working take-home pay to maintain a similar lifestyle in retirement. The reductions occur in basic costs associated with working including: transportation, clothing and lunches along with fewer payroll deductions, taxes and contributions to 401Ks. Medicare kicks in at 65, and supplemental insurance is usually significantly less than regular medical insurance.
For someone earning $50,000 a year, now needing about $40,000 in annual replacement income, about half the dollars will come from Social Security and the rest must come from retirement savings, a pension fund or both. Since many people are not financially prepared to live for another 15, 20, 25 or more years, they have little choice other than to keep working as long as they can.
There is no way to turn back the clock on the savings process. If someone did not save in at least their forties and fifties, there is no way they will have enough money to retire in their mid-sixties. In some instances, older, mature, experienced workers can be an asset for a company, even though their salaries and benefits may be higher.
Sooner rather than later younger workers, with new skills and new thinking, will be more affordable in the short-term and ultimately be a greater value to the company’s future. At this point, the 65+ worker might be reduced to part-time work or will have to go into the marketplace and compete with other for jobs, often for less money.
Fortunately, there are new attitudes regarding working beyond the traditional retirement age. Some like to work because they like the structure, others like the freedom of extra income and some must do it to survive. No matter what the reason, people are living longer, so why shouldn’t they work longer?
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