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Delaying retirement just for fun

By Jennie L. Phipps · Bankrate.com
Sunday, December 19, 2010
Posted: 10 am ET

If you're one of the people whose retirement planning includes staying on the job past age 65 because you like to work, join the ever-growing club of people who just don't don't want to embrace retirement.

The going wisdom is that the troubled economy is pushing people to work longer, but Gary Burtless, labor economist for the Brookings Institution, today released a study on this issue, concluding that people are working longer because they choose to -- not because they are forced to by economic issues.

Burtless and his co-author Barry P. Bosworth, examined unemployment data going back to the 1970s, as well as investment returns and real estate values for the same time periods, and determined that there appears to be only minimal statistical connection between economic factors and the age at which people stop working. During most of the last decade -- when good-paying jobs were plentiful, home prices were skyrocketing and stock portfolios were healthy -- the number of people working longer was increasing steadily.

"It came as a surprise to researchers that people are leaving the labor market at older ages -- and it's not a recent trend," Burtless says. "Starting with women in the mid-1980s and men in the early 1990s and picking up strength in the last decade, people are staying in the work force longer and longer."

If it's not by necessity, why is that true? That's the subject of Burtless' next research project, so he can't be too definitive, but his early conclusions suggest:

  • Social pressure. If all your friends and neighbors are still working at 65, you'll probably keep working, too.
  • Changing pension structures. Defined benefit pensions encouraged people to leave the system early. With 401(k)s and other kinds of defined contribution plans, there is no incentive to quit early.
  • Health insurance. Medicare doesn't kick in until 65. If you leave your job before that, you'll probably lose your health insurance and you may not be able to buy more.
  • People are healthier. "We think it is uncontestable that people in their 60s are in better health than 60-year-olds were 20 years ago and in much better health than 60-year-olds were 40 years ago," Burtless says. "Plus, most people today don't do physically demanding work."
  • Full Social Security benefits don't kick in until 66. The penalty for taking Social Security before 66 has increased. And if you earn the median U.S. personal income, which is $31,000 for a high school graduate and nearly $60,000 for a college graduate, Social Security will force you to wait.

Burtless concludes, "If you are permanently laid off from a career, it can be difficult to find work that is equally well paid and equally challenging. But if all you have to do is hang on, for increasing numbers of people, that scenario looks very attractive."

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