Editor’s note: This is the fourth in a five-part series of a joint project by The News-Sentinel and WANE, Channel 15. Each Monday we will look at topics facing the area and the impact on residents.
To retire or not to retire. That is the looming question men and women across the country who are near or at retirement age are asking themselves as their nest eggs take a nosedive.
“Clearly, people are taking a second look as to when they are comfortable to retire,” Boston College’s Andy Eschtruth said, referring to the financial health of people, mostly those in their 60s. Eschtruth is associate director of external relations for the Center for Retirement Research at the college.
“For many years, the average retirement age for men had fallen through much of the 20th century.
“By the mid-1980s, it had dropped down to 62 or 63 and stayed there for 20 years or so.”
But new data compiled by and recently released by the Center for Retirement Research shows the age of retirement has climbed significantly. The center looked at data from the U.S. Department of Labor, defining average age of retirement as the youngest age at which at least 50 percent of men have left the labor force.
“In the past couple of years, it’s been jumping up, and now the average age is about 65,” according to 2008 figures. “Even though that doesn’t sound like a lot, it’s actually a dramatic departure from what it was for about 20 years.”
The U.S. Bureau of Labor Statistics in July reported that the 65-plus workforce increased more than 101 percent between 1977 and 2007.
Financial adviser Ben Collier isn’t surprised by those figures. When he first started in the business in 1994, “Our average client was in their 70s,” he said of his company, Collier Financial, 5904 E. State Blvd. “In the past five years we’ve worked more with adults who were the children of those seniors” – people who had planned on retiring at 62 or 65.
“They’re not planning on retiring at those same ages anymore,” he said. “They realize they’re going to have to work to make up for the financial hit they’ve suffered.”
They are also looking at ways to ensure safety of their retirement funds. Collier Financial does not sell stocks or mutual funds, only fixed annuities, which have a guaranteed rate of interest. The volatile stock market is a boon to him.
“We’re definitely on track to have one of our biggest years ever,” he said, noting the already-retired and those approaching retirement are looking at safer investments. “People’s retirement dollars have been eaten up in a bad economy in a way they never expected. On top of that, you’re living longer and your health insurance costs are going to continue to be higher.”
Still, he said, “There’s a lot of opportunity really for people who have been in the market. If you didn’t lose a bunch of money, you can get up in the morning and throw a dart and you’ll hit good stocks, big companies that are not going away.” Yet overall, he said, “There’s more focus on protecting what you have.”
The “protecting what you have” mode is also why older workers are delaying retirement. Those who have a job are holding on to it longer and delaying retirement. And keeping the job or finding a new one is not just about making up for lost investments. According to an August report by Fidelity, of the 69 percent of baby boomers planning to work in retirement, two-thirds said the reason will be to cover basic living expenses.
“I’m not even considering I’ll have Social Security,” said Collier, who is in his mid-30s.
On the other hand, for the laid off or recently retired older worker, returning to the workforce may become more difficult. In January the nonpartisan economic and social policy researcher Urban Institute in Washington reported the unemployment rate for adults age 65 and older had reached a 31-year high of 5.1 percent. Those were individuals who were looking for work or who reported they had lost their job.
At the same time, the overall share of adults 55 and older had not declined. One factor to take into consideration is that the population in that age group continues to grow.
Collecting accurate data on retired or older workers is difficult, Eschtruth said, noting, “There’s never been a clean way to do that. The government has no official definition of retirement.” Nevertheless, “The data is consistent in that what we’re seeing is higher levels of older workers in the labor force.” Reality is, he said, “People are probably going to have to work longer.”
The latest data from the Center for Retirement Research at Boston College and the Bureau of Labor Statistics show a dramatic increase in the average retirement age since 2002.
* 2008 estimated