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Say goodbye to early retirement

By Jennie L. Phipps ·
Monday, June 30, 2014
Posted: 6 pm ET

A new government study shows that a decades-long trend toward retirement at a young age has reversed, probably because we can no longer afford it.

retirement-blog-us-census-bureau-delaying-retirementIn 1950 -- 45.8 percent of men 65 and older were working, according to a report on 65+ in the United States: 2010, released June 30 by the U.S. Census Bureau. Through the decades of the 1960s, '70s and '80s, generous pension plans made it ever likelier that men would hang up their work boots at earlier ages. By 1993, only 15.6 percent of men were working past age 65. (The number of women 65 and older who remained in the workforce has always been small, rising from 9.7 percent in 1950 to 10.6 percent in 2003.)

Then came a perfect storm of factors in the last decade that has encouraged more older men -- and women -- to stay on the job, with workforce participation in 2010 rising to 22.1 percent among men older than 64 and 13.8 percent among women of the same age. "The rise in labor force participation is interesting as both a potentially long-running trend, and because we saw that during the recession that it was the older workers whose employment share actually rose. They were the only age group to have their employment share rise," says Loraine West, chief of the Eurasia branch of the population division of the Census Bureau and an author of the report.

Here are some of the issues -- benign and otherwise -- that the study suggests are pushing people to work longer.

  • People are living longer and their health is better at older ages.
  • More people work with their brains rather than brawn.
  • The age when people are able to collect an undiscounted amount of Social Security has climbed from age 65 to 67 for those born in 1960 and later.
  • There's no Social Security earnings test penalty beginning at age 66. In 2000 the federal government eliminated a provision that limited the amount of wages workers could get paid and still collect their full monthly Social Security benefit for those who had reached full retirement age. According to the report, some studies found that this change resulted in a 3.5 percent increase in the employment of people older than 64 and a 2 percent increase in the employment of people age 66 to 69.
  • The demise of old-fashioned, defined benefit pensions. The number of people expecting defined-benefit pensions, which puts the retirement planning burden on employers instead of workers, has declined from 62 percent in 2005 to 52 percent in 2010. Still fewer future retirees are expecting this kind of secure pension. Only one-third of employees in 2011 said that they or their spouses were participating in a defined benefit pension at their current jobs.
  • Savings have declined. Nearly two-thirds of people ages 50 to 64 reported that they lost money in mutual funds, individual stocks or 401(k)-type retirement accounts during the recession. Among those older than 64, 5 percent lost more than 40 percent of their investments.
  • Job loss prior to retirement. In 2010, the unemployment rate for people age 55 to 64 averaged 7.1 percent. That was more than double the average rate in 2007 of 3.1 percent.

Social Security is the No. 1 source of income for everyone older than 64, with 86.3 percent receiving it. About 52 percent also have income from savings and nearly 40 percent get some pension or other kind of income from their former employers. More than 26 percent also rely on income from work.

Expect that percentage to rise. "We haven't seen projections for the future, but researchers had already identified a rising trend in later retirements prior to the recession," West says.

Will you ever retire?

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July 07, 2014 at 6:18 pm

average working people cant save between gas, growing taxes,every necessity going up. wages are not keeping up. my husband and I will be eating cat food( is we can afford that)

July 02, 2014 at 5:13 pm

If the government would stop taxing investments in the stock market and allow them to grow in a account tax free similar to Roth. People would have a fighting chance at retiring at 65. We already paid income tax, why tax again on long term capital gains.
We bailed out the banks, how about a bail out for the average joe.

July 02, 2014 at 4:53 pm

For the best chance to retire on your terms (early or not) you should start planning and investing early in life and do it consistently (with every paycheck). If at all possible develop multiple streams of income for retirement (social security, pensions, dividends, part time work, etc.) and not depend on social security benefits as the sole source of income. I found that the site Retirement And Good Living provides good information on planning and finances as well as many other topics including health, retirement locations, part time jobs, volunteering and more. And it has a great blog of posts by guests from around the globe.

July 02, 2014 at 4:06 pm

Don't forget about medical bene's .As we age we tend to breakdown more often and it has become very expensive to get sick these days

July 02, 2014 at 1:54 pm

Saving and Investments are not available to all. When they are, there is no certainty to the future of these retirement tools. Did you read the article? Most people lost on their retirement investments. My wife and I did. We went form about 500,000 for retirement to about 100,000. What this really means is no retirement. Both of us expect to die at our desk. Ironically, if workman comp covers the loss, the settlement will be small as the payout is based upon a % of current pay and longevity. There isn't much longevity after 65 years of age.

Patricia Hendershot
July 02, 2014 at 11:56 am

There is an "up-side" to this beyond what 401K's and Social Security yield. Out of necessity greater mental longevity is born.What happens when we stop using things?? We decay and die--we see that in nature all the time. This is a good way for us "oldies" to remain vital and relevant. It's the Ying/Yang with this as in all other life issues.

July 02, 2014 at 11:10 am

It is amazing, and not in a good way, that some people simply cannot address the issue at hand without dragging Democrat versus Republican politics into it. The facts are clear, minus the political b.s., start saving young, live on your after savings income, max out your 401 contributions, etc. Beside those obvious common sense ideas, one of the most relevant things mentioned is the decline of pensions. Old fashioned defined pensions are becoming a thing of the past, and have been replaced with either none for the majority, or bloated pensions on the part of a few. Do your best, regardless of your age, it really boils down to common sense.

Mark K
July 02, 2014 at 10:02 am

So long as you save enough money and invest it wisely or at least work with someone who can, you can retire at any age. I plan to retire early and will defer collecting Social Security until at least age 66 or maybe even 70. The secret? Fully max out your 401k and start early. Pay into savings first and set your standard of living based on what's left after savings is deposited. Never touch the savings until you retire.

This is not a Democrat or Republican issue like some above try to make it. However, the stock market (and my investments) tend to do better under Democratic presidents than Republican ones.

July 02, 2014 at 9:21 am

Good for you Robin congrats on your degree. but one more lesson for you DO NOT VOTE FOR DEMOCRATS they are really LIBERAL SOCIALIST the democrats are the reason the American dream is fading

July 02, 2014 at 9:02 am

As for me , all I ever wanted was a living wage. I was raised by a single mother who barely had enough to put food on the table and a roof over my head but she loved me and told me what was truely important in life. I finally went to college when I was in my 40's. Alas I graduated during the great recession. Now I still working in minimum wage jobs. My college degree didnt get me the job I wanted but I am proud I finally got a degree. I wish I could get a job that pays enough to save for retirement but I consider myself blessed because I have a husband who loves me. I am rich in everything except a good paying job. I'll just keep my head down and applying for positions when I am not at work.
All in all I consider myself blessed that I have what I have and I hope and work for the future.