True or false? You may have heard this claim before (or something
like it): “Many Americans are being forced to retire later because their
savings and investments took a hit in the Great Recession.”
Recently,
a big-name economist disputed that belief. In a commentary for
Bloomberg, former White House budget director Peter Orszag wrote that
some of the statistics don’t seem to back up this conventional wisdom,
but perhaps it all depends on which statistics you cite.
A fact
that can’t be ignored. In mid-January, a widely reprinted Washington
Post article mentioned that since the start of the recession, the
population of U.S. workers older than 55 has increased by 12% to
3.1million.1
Examining this Labor Department finding, the Post
feature referenced longevity and the loss of traditional pension plans
as contributing factors. It presented stories of older workers who
didn’t think they could easily retire, and quoted respected commentators
such as Alicia Munell, director of the Center for Retirement Research
at Boston College, who remarked that “some of these people are just
clinging by their fingernails to jobs.”1
But is there more to the
story? It turns out that Americans were trending toward staying in the
workforce longer even before the recession. In 1994, Orszag notes, 43%
of Americans aged 60-64 were working; in 2006, it was 51%. Nearly half
of 62-year-olds went and claimed Social Security benefits in 1994, but
12 years later, less than 40% of 62-year-olds followed suit.2
Orszag
mentions another factor that may have kept older employees working
during the recession: declining home equity. Put that alongside
diminished IRA and 401(k) balances, and there was every reason to stay
on the job these last few years.
However, just because older Americans wanted to keep working didn’t mean that they could.
In
the 2011 edition of its respected Retirement Confidence Survey, the
Employee Benefit Research Institute found that 45% of retirees ended
their careers earlier than they wanted to, in many cases due to layoffs
and health issues.3
The Post article noted that the jobless rate
for workers older than 55 was just 3.2% in December 2007 when the
downturn began. In December 2011, it was up to 6.2%.1
The
percentage of employed Americans aged 60-64, which had steadily risen
during the 1990s and early 2000s, has remained at roughly 51% for the
past five years.2
That brings us to Orszag’s central point: “The
bottom line is that people’s retirement decisions aren’t always entirely
voluntary.”2
How about your retirement decision? Do you think you
will retire when you want to retire? Are you prepared for retirement
financially? A new year is a good time for a new look at the state of
your finances and your retirement readiness. With astute planning, you
might be able to retire sooner than you think.
What should be the
basis of that final decision to retire? Your income foundation; making
sure you have safe and secure income that will always be there.
Annuities can provide these benefits, ask your agent today for how you
might benefit form annuity guarantees.
This material was prepared
by MarketingLibrary.Net Inc., and does not necessarily represent the
views of the presenting party, nor their affiliates. Marketing
Library.Net Inc. is not affiliated with any broker or brokerage firm
that may be providing this information to you. All information is
believed to be from reliable sources; however we make no representation
as to its completeness or accuracy. Please note - investing involves
risk, and past performance is no guarantee of future results. The
publisher is not engaged in rendering legal, accounting or other
professional services. If assistance is needed, the reader is advised to
engage the services of a competent professional. This information
should not be construed as investment, tax or legal advice and may not
be relied on for the purpose of avoiding any Federal tax penalty. This
is not a solicitation or a recommendation to purchase or sell any
investment or insurance product or service, and should not be relied
upon as such. All indices are unmanaged and are not illustrative of any
particular investment.
Citations.
1 – www.usatoday.com/USCP/PNI/NEWS/2012-01-17-PNI0117biz-older-workersART_ST_U.htm [1/11/12]
2 – mobile.bloomberg.com/news/2012-01-18/look-at-jobs-before-leap-on-older-retirement-commentary-by-peter-orszag [1/18/12]
3 - www.ebri.org/pdf/briefspdf/EBRI_03-2011_No355_RCS-2011.pdf [3/15/11]
No comments:
Post a Comment