There are still many naive people out there with a plan, nay dream of retiring at age 55 or when they complete the required minimum years of service – think public pension plans. Retiring in that case usually means collecting a pension from a good job and then taking a job doing low skill work for somebody else.
Still the typical retirement age is 62 and together with collecting Social Security plus the amount saved for retirement, the typical worker will be just … screwed 😳
I’m not sure why we keep talking about this retirement dream because nobody seems to be listening. Employers have abandoned pensions, the government keeps putting out one new retirement saving plan after another, even at the state level … we are virtually trying to force people to save and too few are paying attention.
And NO, in the majority of cases it is NOT because they can’t afford to save, it’s because of what I call the hierarchy of affordability. The list of what people can afford is long and at the bottom of the list are retirement savings and health care expenses … and that’s the truth like it or not. Pass that along to the liberals and socialists who bemoan the beleaguered middle-class.
Not only aren’t people saving adequately, they have no clue about investing for growth, using their money in retirement, planning for survivor income or their expenses in retirement; most notably health care expenses. They are generally oblivious to those pesky problems of inflation and longevity.
Even for more realistic individuals looking to retire at 65 or latter, the trip can be bumpy because you simply don’t have control over all factors that may shove you off the road. It seems the key is to plan to retire at 70 and “plan” to retire much sooner.
Plans vs. reality The typical (in this case, median) American retired at 62, according to the Transamerica Center for Retirement Studies’ survey of American Retirees and pre-retirees.
Workers aged 50 and older are planning to retire a little later in life, at a median age of 67, according to the same survey. With the shift in Social Security benefits to a later retirement age, and with the demise of traditional pensions (meaning the average American has to do more personal saving for retirement, something we as a country are well behind in), it makes sense that people would be waiting longer to retire. But there’s only one problem with that: Retirees had planned to retire later than 62, too.
In fact, 60% of current retirees retired sooner than they’d planned, according to the Transamerica survey. And of that group, only 12% retired because they believed they had enough money for retirement (and, to be fair, another 4% because they received a windfall, such as an inheritance). Twenty-seven percent retired because of “organizational changes at my place of employment”, 27% because of ill health, and 26% because they lost their jobs. Don’t assume you’re immune.
The conventional wisdom has been that blue-collar workers are disproportionately affected, as aging makes it more difficult to perform demanding physical tasks. The assumption goes that those workers are more likely to be laid off as they become unable to perform daily at their jobs, and that white-collar professions are largely insulated because of the lower physical demand. However, new research out of the Center for Retirement Research at Boston College shows that it’s not that simple. The study calls out a number of non-physical abilities that also decline well before full retirement age. Here’s an example, quoting from the study:
‘[F]luid’ cognitive abilities, such as episodic memory, working memory, and reaction time — which people need to acquire new information and make decisions — steadily decline with age starting in one’s twenties or thirties.